Buy Alert: January 6, 2015
Buy Alert: January 6, 2015
Option Strategy:
Buy Market Vectors Gold Miners ETF (GDX) March 20, 2015 $21 calls for $1.60 or better.
Commodity Outlook: Gold
Something very interesting is happening in the gold market…
Despite a remarkable rally in the US Dollar the past 5 trading days, gold is holding up very well. In fact, the yellow metal is trading $1,212 as I write, which is nearly $30 an ounce higher than where it traded on December 31st, 2014.
And that’s not all…
Gold stocks have made a stunning bullish turnaround the past few days. Whenever commodity-producing companies lead a rally over the actual commodity, it’s time to sit up in your chair and take notice.
While it’s hard to justify a fundamental reason for higher gold prices, we simply can’t ignore the bullish technical signs the gold market is giving us right now.
So here’s what we’ll do…
Resource Play: Market Vectors Gold Miners ETF (GDX)
Instead of picking a specific gold mining company to take advantage of a potential rebound in gold, we’re using a mining ETF.
Why?
If there is a sustainable rally coming for gold miners in coming months I want to make sure we take advantage of it. In case you’re unaware, GDX top gold mining companies like Barrick Gold (ABX), Goldcorp (GG), and Newmont Mining (NEM) along with plenty others.
If gold continues higher, GDX is virtually guaranteed to rally with it.
I don’t want to take a chance of picking a mining company that lags the rest of the industry for some unforeseen reason.
So here’s what we’ll do…
Buy the GDX March 20, 2015 $21.00 calls for $1.60 or better.
The current bid/ask spread for this contract is $1.39/$1.47
Do not pay more than $1.60 per contract!
Our official entry price for performance tracking is $1.47. Your price may be higher or lower.
Exit Strategy:
Remember, we want GDX to trade higher. Our first profit target is $23.00, while our second target is $26.00.
The risk control price for this trade is $18.20. If GDX trades below that level, conservative investors should consider closing this trade to preserve capital.
Category: Commodity Trading
