Buy Alert: December 7, 2015

Buy Alert: December 7, 2015

 

Option Strategy:

Buy Newmont Mining $NEM January 15, 2016 $21.00 calls for $0.80 or better.

 

Commodity Outlook: Gold

Something very interesting occurred last week…

As you may have heard, the European Central Bank (ECB) announced a smaller than expected stimulus plan last Thursday.  The surprising news sent the Euro surging as bearish traders scrambled to cover short positions.

Here’s the key…

Thanks to the stunning Euro rally, the US Dollar succumbed to vicious selling late last week. In turn, the price of gold rallied a remarkable $25 an ounce on Friday alone.

Is this the start of a larger upturn in gold?

With the next FOMC just nine days away (which will most likely bring a rise in interest rates with it), the conventional line of thinking suggests gold will suffer.

But last week’s huge dollar downturn has me thinking the currency markets have already priced in the Fed’s first rate hike.

That means we could see the US Dollar weaken further, even though interest rates are set to rise.

I admit, this line of thinking goes contrary to customary economic principles.

But folks, when it comes to the economy, these aren’t normal times…

Here’s how we’ll position for the potential of higher gold prices!

 

Resource Trade: Newmont Mining $NEM

As you may know, we recently racked up gains of at least 100% on call options in this well-known gold miner.  Fact is, this stock moves swiftly higher when gold market conditions are favorable.

Here’s the deal…

$NEM rallied sharply (9.2%) last Friday as investors factored in the unusual situation the currency markets are creating.

So here’s what we’ll do…

Buy the $NEM January 15, 2016 $21.00 calls for $0.80 or better.

The current bid/ask spread for this contract is $0.70/$0.73.

Do not pay more than $0.80!

Our official entry price for performance tracking is $0.73.  Your price may be higher or lower.

Exit Strategy:

Remember, we want $NEM to trade higher.  Our first profit target is $22.50 while our second target is at $25.00.

Our risk control line is at $18.50.  If $NEM trades below that level, conservative investors should consider closing this trade to preserve capital.

Until next time,

Justin Bennett

***Editor’s Note***  Please be sure to read the new free report posted to the member’s only section of the Commodity Trading Research website. This valuable report focuses on trade management techniques specifically designed for the style of trading we do in the Options Profit Pipeline.

Category: Commodity Trading