Buy Alert: March 6, 2014

| March 6, 2014

Buy Alert: March 6, 2014

 

Option Strategy:

Buy Barrick Gold (ABX) May 16, 2014 $21.00 calls for $1.07 or better.

 

Commodity Outlook: Gold

After a brief correction yesterday, gold is back on the move higher today.  The yellow metal is trading at $1,345 as I write.  That’s just a stone’s throw away from the weekly high of $1,350 set Monday. 

If gold challenges the early week high and breaks it, we could very well see a breakout to the $1,375 area- and possibly higher.

Here’s a company that will undoubtedly benefit from rising gold prices…

 

Resource Company: Barrick Gold (ABX)

As you may know, ABX is one of the biggest miners in the world.  The company fell on hard times in 2013 as the price of gold plummeted. 

But here’s the deal…

Thanks to the nascent rebound in gold prices this year, ABX has been on a steady technical uptrend since testing $15 in December 2013.  If the yellow metal gets the breakout we’re looking for, ABX will likely jump above technical resistance at $21.00, and continue to the $23.00 area.

Let’s buy the ABX May 16, 2014 $21.00 calls for $1.07 or better. 

The current bid/ask spread for this contract is $0.98/$1.00. 

Pay no more than $1.07 per contract!

Our official entry price for performance tracking is $1.00. Your price may be higher or lower.

Exit Strategy:

Barrick Gold

Remember, we want ABX to trade higher.  Our first profit target is the $23.00 resistance area.  We could see additional gains for ABX if gold jumps to the $1,400 area in coming months.  In such a scenario, ABX may jump to our second profit target at $25.00.

The risk control price is $17.90.  If ABX trades below that level, conservative investors should consider closing this trade to conserve capital.

 

Category: Commodity Trading

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