|Re: added some gold related positions today, managed leverage approaching 9-1...|
Went long Gold July 5th, holding August 148 GLD calls from $2.65, now $13.45, August 36 SLV Calls from $1.33 now $4.00!!!!
Equities continue to fade here as we head into the close as we noted equities would likely get spooked a bit over Fed commentary that economic activity is weak enough to warrant yet another round of stimulus...again, big beneficiary will be Gold and Silver as QE3 now a major tailwind in addition to major concern over Eurozone sovereign debt, European banks, uncertainty over US debt ceiling, and bullish technicals, all of which are creating the absolute perfect storm for precious metals here...important to note, now that Fed has openly discussed the possibility of QE3, each and every piece of weaker than expected economic data from here on out will raise the probability of QE3, and hence expect to see much stronger reactions in Gold and Silver on economic data releases...in terms of upping our exposure to precious metals, we just went long August 36 SLV calls here in $1.30s as we believe Gold breakout to new highs will produce a major short squeeze in silver here near-term as funds and especially retailers scramble to regain exposure to precious metals, and will likely jump into this higher beta metal just as they did several months ago...will we see new highs in Silver? doubtful, however we believe we'll see another move over $40 near-term and we'll reassess strength of momentum once we get there
Putting a target of $1625-1650 on Gold next week, Silver $40-42 as this discussion of QE3 in FOMC minutes will produce a major retail as well as fund chase in precious metals again here near-term which will force all previous metals shorts to cover
JULY 5, 2011
Equities still holding onto gains into close even after intraday Moodys headline on Portugal...have a feeling Fed told banks to hold onto June POMO capital and stockpile it for last week of June and into July to transition market into a non-QE environment...so Fed essentially bought up those bonds in June, banks held onto capital (note equity market weakness in June) and are now putting it to work here in July to kill that "no QE = equity market is screwed" theory....however this bid will not be here indefinitely in my opinion, it will probably linger for the first couple weeks of July then we'll start to see it die off as POMO capital dwindles down to zero and market is left with very few bidders...so next couple weeks we'll likely see this bid in markets regardless of news, optimal short may therefore come mid-July sometime....in the meantime, long bias toward equities probably best bet here...outside of equities, precious metals looking very solid with both GLD and SLV bouncing strongly off double bottom, have a feeling todays move is the start of a strong technical upleg with Silver likely trading up to $39-40 and Gold retesting those $1570 highs, therefore just got long August 148 GLD Calls at $2.65 while continuing to hold onto SLV long position from $33.75 (initial inverted head and shoulders we spotted on SLV chart did not pan out but ETF held onto $32.00 level where our stop was set)...with respect to tomorrow, ADP Employment will give us another look at private labor market and ISM Services also out just after the bell at 10AM, based on price action so far (no real mystery sellers) numbers should probably be ok with any technical dip down to 1330 or so on S&P likely being bought...also continue to keep an eye on dollar here near-term even though equities likely to decouple a bit from correlation to greenback, however still important to watch it as a gauge of Eurozone stress as dollar action very much hinged on Euro action here...symmetrical triangle on FXE chart show FXE should head down to just under $142.00 on this pullback, UUP just over $21.50
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| Reply to Ry5577 - Msg #2387 - 07/29/2011 14:41|
Re: added some gold related positions today, managed leverage approaching 9-1 now...\
Yep, many naively think this Gold/Silver move is fully predicated on default, not even close
most of it being driven by expectation of massive QE3...note Treasuries, Gold, Silver higher, dollar down, equities however conflicted
also China with a mere 1.7% allocated to Gold with respect to forex reserves, have to assume they're buying big again right now with US credit rating under review and prospect of another round of dollar printing....that China gold allocation going to 10% over next several years