Buy Alert: January 28, 2016

| January 28, 2016

Buy Alert: January 28, 2016


Option Strategy:

Buy Market Vectors Gold Miners $GDX June 17, 2016 $14.00 calls for $1.70 or better.


Commodity Outlook: Gold

This morning’s durable goods orders report was a real stinker…

For the month of December, durable goods orders fell 5.1%.  Consensus expectations for the report were for a gain of 0.2%.  Clearly, economists and analysts are overestimating the strength of the US economy.

Folks, the warnings signs of recession are becoming more and more apparent.

This morning’s durable goods report confirms other recent economic releases that point toward a big growth slowdown, one that could push the US into recession.

As you know, in recent reports we’ve discussed the high probability of the US Federal Reserve having to backtrack on its plan to raise interest rates in 2016.

A return to 0% rates, and possibly even quantitative easing, becomes more likely with each new batch of woefully poor economic data.

Here’s a way to capitalize on the precarious situation facing the US economy…


Resource Trade: Market Vectors Gold Miner $GDX

As you know, we’re already long the gold and silver market via $GLD and $SLV call options.  Today we’re adding gold miners to the mix.

In case you’re unaware, gold mining stocks are capable of racking up big gains once the price of gold starts trending higher.

So here’s what we’ll do…

Buy the $GDX June 17, 2016 $14.00 calls for $1.70 or better.

The current bid/ask spread for this contract is $1.55/$1.63.

Do not pay more than $1.70!

Our official entry price for performance tracking is $1.63.  Your price may be higher or lower.

Exit Strategy:

Market Vectors Gold Miner

Remember, we want $GDX to trade higher.  Our first profit target is $16.50 while our second target is at $18.00. 

Our risk control line is at $12.30.  If $GDX trades below that level, conservative investors should consider closing this trade to preserve capital.


Category: Commodity Trading