Weekly Update: March 11, 2015

| March 11, 2015

Weekly Update: March 11, 2015


Big Picture Outlook:

Last Friday’s US jobs report was quite surprising…

The Department of Labor revealed 295,000 jobs were added to the US economy in February.  The report was well above market expectations and points to a strong US labor market.

While that’s good news for the economy, it’s a bad sign for precious metals…

With the unemployment rate sitting at 5.5% and job growth robust, it’s likely the US Federal Reserve raises interest rates soon.

With higher interest rates on the horizon, investors are piling into the US Dollar. 

As you may know, a strong dollar is bad news for commodities in general, but especially for precious metals.

Investor enthusiasm for gold and silver has all but disappeared since an early-year rally sent the metals to respective multi-month highs at $1,300 and $18.50 an ounce.

Both metals are currently trading back near multi-year lows.

What do we do with our positions in the IAU January 2016 $12 calls and the SLV January 2016 $18 calls?

It’s becoming quite clear the market is ignoring the looming start of quantitative easing in Europe, which is what got us into this trade in the first place.

While we still have enormous amounts of time until expiration, gold and silver are clearly moving against our call positions.

At this point, it’s best we just stick with the plan laid out in the original trade alert…

If IAU closes below $10.90, conservative investors should consider closing their $12 call position to conserve capital.

It SLV closes below $14.50, conservative investors should consider closing their $18 calls to conserve capital.

Let’s get to the rest of this week’s updates…


Portfolio Highlights:

Editor’s Note: I won’t update every open position every update.  I focus on the positions with significant news or price movement.

. . . . Exxon Mobil (XOM) March 20, 2015 $90 calls

Other than the fact it is drastically oversold, there’s not much appealing about XOM right now.  The world’s largest oil company has been stuck in an unrelenting downtrend since mid-February.

Selling was so heavy in recent days that XOM broke to new multi-month lows.  As a result, our risk control line at $85.90 was hit.  That means conservative investors should consider closing this trade to conserve capital.

If you’re aggressive, you can hold these calls through to expiration later this month.

. . . . EOG Resources (EOG) April 17, 2015 $95 calls

Much like XOM, EOG has suffered in the past week.  Shares of the independent oil and gas producer slipped slightly below our risk control line at $86 this morning.  That means conservative investors may want to close this trade to conserve capital.

If you’re aggressive, stick with this trade for a while longer.  We still have over a month until expiration, which is ample time for EOG to trade back to the top of its trading range at $97.

Our profit targets are $95 and $97.


Category: Commodity Trading