What are your upside targets on GLD? I've been holding since ~$157/share and the original plan was to sell at $1700/oz, but this move looked so incredibly strong. I don't have some fancy quant model for the price of gold; I just parked my money there as a kind of default. Technical chart pattern targets suggest about another $3 of upside, but this up move seemed so strong that I am questioning how much we can get out of this move.
I have no idea how people come up with their guesses on how high gold will go. Some say 1700, some 2000, some 2500, etc. I just think it's currently trying re-build a continuation of the long term uptrend which peaked at 185.85 last year. IMO, the downtrend/correction since September 2011 was "broken" when a higher low was put in at 150.15 back in June. Then we had the recent breakout from the 150-159 channel, and are now in the mid 160s. To really be convincing, GLD now needs to make a higher high above 174.00/175.46. This would "break" the pattern of descending highs since 185.85. IF it does all that and then pulls back to a new higher low above 150.15, the next stop is 186, and a new all time high! Can it do all this? I have no idea, but I sure hope so!!
I for one am happy to see things finally going in this direction. I went long on straight GLD calls (Jan $170) back in early summer, average price $5.20. They just went into profit Friday. FINALLY. Saw quite a drawdown back in July-early August when we were stuck in the triangle pattern.
That's a perfect example of why it's worth paying extra for lots of time, via back month options and LEAPS. Your timing doesn't have to be perfect, and you don't need a huge sudden move to win on the trade. It gives the underlying a chance to work things out, and then start trending again when it's ready.
Agreed. It's so much better on the nerves too. The ONLY down side is that it ties up capital. But so does car insurance. And it's sure nice to know that policy is there in case somebody runs a red light when I'm going through the intersection.
I prefer getting a good night's rest too! As to capital and loss control: I set my price limit at 2% of Equity for each Option, then get as much time, as low a strike price, and as high a Delta as possible for that much $. My last purchase was a March 175 Call for GLD. With all that time to watch the chart develop and reconsider, I'd have to go into a coma to ever loose all 2% - so I sleep like a baby.
Closed this position today for 0.6 debit (paid $6 plus comms) Result after commissions + $35.90 Not as good results with the GDXJ butterfly though...(see future post)
SLW still open (expiry is in OCT12). GDXJ Buttefly: I closed the position receiving $10 credit minus comms. Result for the trade negative: -$22.19 (-85% of initial 26.09 invested to open the trade) Conclusion: I will stay away from butterflys until I learn more.
Of course the Fed's QE3 decision is great news for the Gold/Silver uptrends. New Highs seem very realistic to me now. Will continue adding to my positions, especially if we get a dip/pullback before too long.
I think it all depends now on whether and when the ECB and China continue with their QE's. The ECB, for example, cannot act until Spain etc. requests help and Spain is trying to avoid doing so as long as possible. The U.S. alone is only 20% of global money supply.