Weekly Update: February 3, 2016

| February 3, 2016

Weekly Update: February 3, 2016


Big Picture Outlook:

Precious metals are getting a nice bid today…

As I write, gold is up $13.80 an ounce (+1.2%) while silver is up $0.41 (+2.88%).

While the upturn is certainly beneficial to our open positions, it’s the downturn in the US Dollar that really has me excited.

The US Dollar index suffered a dramatic 1.73% loss today, falling to its lowest point since November 2015. 

Thanks to another round of incredibly weak US economic data, investors sent the greenback sharply lower as the odds of additional Fed rate raises are dropping quickly.

Here’s the key…

Given the current economic uncertainty in the US, we could be witnessing a top in the US Dollar.  If the dollar index falls to $95 in coming weeks, it will further solidify this theory.

Why’s that important?

As you may know, the unbelievable strength in the US Dollar since mid-2014 has been a huge headwind for commodities.  Most commodities have been driven to multi-year lows due to the greenback’s remarkable rally.

However, if bears can send the currency back toward the early 2015 highs near $90 in coming months, we should see a big boost in confidence towards the entire commodity space.

It may be hard to believe, but the first quarter of 2016 may be a big turning point for commodities!

Let’s get to our open positions…


Portfolio Highlights:

Just a quick note: I won’t update every open position every update.  I focus on the positions with significant news or price movement. 

. . . . SPDR Gold Trust $GLD March 18, 2016 $106 calls

Gold made another strong move higher today, closing at $1,143 an ounce.  Thanks to the recent run to higher prices, $GLD is within a whisker of our first profit target at $110.

As it sits now, our $106 calls are trading at a $4.45 bid- a 46% gain from our entry.

If the dollar continues lower in coming sessions, it’s likely $GLD achieves our first target, and possibly our second at $112.00.  Keep holding these calls for higher prices!

. . . . iShares Silver Trust $SLV April 15, 2016 $13.50 calls

Silver rose to multi-month highs in today’s session.  The upturn sent $SLV over $14 in mid-day trading, which pushed our $13.50 calls up to a $0.87 bid. That’s a 31% gain from our entry at $0.66.

Remember, our profit targets in $SLV are at $15.00 and $16.50.  Keep holding these calls for higher prices!

. . . . US Oil Fund $USO July 15, 2016 $8.50 calls

For the third week in a row, WTI crude rallied off bearish EIA inventory data.  WTI ended today’s session up $2.66 a barrel (+8.9%), which is a relief since the commodity tested $30 again in recent trading.

Remember, with a July expiration, we have plenty of time for these calls to work out.  Keep holding this trade for higher prices in USO!

. . . . Southern Company $SO February 19, 2016 $47 calls

$SO hit our second profit target at $50 on Monday!  The rally sent our $47 calls screaming to a $2.90 bid, which is a sweet 195% gain from our entry at $0.98.

With the second profit target achieved, aggressive investors should have already collected additional gains in this trade.

. . . . Market Vectors Gold Miners $GDX June 17, 2016 $14 calls

Gold stocks are on a roll!

$GDX rallied hard in today’s session as investors factored in a weakening US Dollar and firm precious metals prices.  The gold mining ETF rallied to multi-month highs, which send our $14 calls jumping to a $2.30 bid- a 41% gain from our entry.

Remember, our profit targets are at $16 and $18 in $GDX.  Given today’s strength and the ample time we have until expiration, this trade could turn into an enormous winner!


Category: Commodity Trading