Buy Alert: July 24, 2015

| July 24, 2015

Buy Alert: July 24, 2015


Option Strategy:

Buy Market Vectors Junior Gold Miners $GDXJ September 18, 2015 $18.00 puts for $1.50 or better.


Commodity Outlook: Gold

It got downright ugly for gold this week…

The yellow metal is down just over 4% since last Friday, and trading below $1,100 an ounce for the first time since 2010.

While we may see a bit of a relief rally in coming days, the prevailing trend is down for gold.  In fact, barring a surprise stock market meltdown over the next few months, there’s a very good chance gold hits $1,000 an ounce or lower, by year-end.

As you know, we’re already sitting on a +100% gain in the SPDR Gold Trust $GLD puts from last Friday.  What’s more, our first profit target at $104 was hit this morning.  Be sure to collect some profits from this trade!

With bears controlling the gold market, let’s bet on additional downside in the gold mining industry…


Resource Trade: Market Vectors Junior Gold Miners $GDXJ

It should come as no surprise that gold mining stocks are suffering immensely right now.  Every miner I pull up on my charting program is dropping like a stone.

Junior gold miners are no exception…

Small-cap gold producers are in an incredible economic bind with gold falling to its lowest price in years.

One of the best ways to trade the junior gold mining industry is through $GDXJ.  Thanks to the gold downturn, this small-cap mining focused ETF is also plummeting to its lowest price in years.

With gold price weakness gaining steam, it’s time to buy puts in $GDXJ…

So here’s what we’ll do…

Buy the $GDXJ September 18, 2015 $18.00 puts for $1.50 or better.

The current bid/ask spread for this contract is $1.30/$1.40.

Do not pay more than $1.50!

Our official entry price for performance tracking is $1.40.  Your price may be higher or lower.

Exit Strategy:

Market Vectors Junior Gold Miners

As you can see, $GDXJ just fell through important technical support at the $22 area.  With this support zone out of the way, $GDXJ is free to search out lower prices.

Remember, we want $GDXJ to trade lower.  Our first profit target is $15.00 while our second target is at $13.00.

Our risk control line is $22.10.  If $GDXJ trades above that level, conservative investors should consider closing this trade to preserve capital.


Category: Commodity Trading