Weekly Market Wrap with Big Al, Chris,Doc and LPG
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Chris. Has nailed it……IMVHO
Finally…………… :)… lol
The baby bull throws the shorts and early profit takers another curveball.
Man, I hope so.
We are aware of your trades Gary. The Brotherhood will no longer manipulate prices on behalf of the banks. After today we will only screw with your trades since you seem to know something.
Divergence between the miners & the metals exemplifies that today. I did take 40% of my position off on MUX @ 1.65
Pretty soon it will be time to hedge long positions for the drop into a daily cycle low. After that I think gold has a second leg up that catches everyone off guard (just like the first leg up did).
I trimmed a bit more on Friday in my miners, nibbled at a few speculative ones that have not had huge run ups yet, and if Gold does drop back down into a DCL, then I’ll add more back to the miners for the second leg. However, after that, I think gold will drop down into a ICL.
Hi Doc, is your reliable indicator still telling you that gol will be moving down through spring?
Yup—-as I’ve said, March will start to tell us. Could I be wrong; yes, however my CBI has not failed me yet—-this could be the first time —-we’ll see.
Next week I sell another one of my stocks that I’ve had 100+% gains from the bottom—I’ve learned from the past that profits aren’t something to sneeze at. Even it would go higher you can’t time the perfect top. The HUGE mistake most people make is not to take profits and ride everything down. Remember the damage down to folks in 2011 that held on to their stocks all the way down. Enough said; have a great weekend.
Hi Doc- If you believe in the stock for the long run, why not hedge with some DUST, so you don’t get out with the risk of not being able to get back in?
I’m totally on board with taking profits, just saying that if you’re in at the low and believe it’s a big winner for the long run, might there be less risk for a lower cost of hedging with DUST or JDST (think that’s the right symbol?) instead of getting out of your position?
+1 JayT To blow out positions at the start of a new bull market is extremely risky. This isn’t 2011. In fact, gold looks better now than in August 2001 in my opinion. Look at the monthly chart (if you’re a stockcharts subscriber):
Andrew’s pitchfork based on monthly closes:
JayT that is a good strategy if you feel that the stock you hold tracks NUGT or JNUG, but if the stock you hold does not track the 3x leveraged ETFs then it is not a proper hedge to use those vehicles against an individual stock.
I prefer trimming back by 15-33% and then buying right back in at 15-33% in an overall 3 tier position. So at times you may enter with 1 tier, average down with a second tier, and then depending on how it goes either:
A) average up when the stock makes a good leg up and then pulls back in a corrective ABC down leg,
or
B) if needed average down into a 3rd and final tier.
I don’t average down into more than 3 tiers to keep from throwing good money after bad and knowing when to cut loose a looser and wait for a more attractive trend to develop.
Conversely, once a stock looks like has bottomed and takes a really big run up, then I trim 15-33% and wait for a pullback, and put that money right back in. Even if I think the move has topped out totally, I’ll initially only take out part of the position maybe 40% or if I really sure 50-60%. I find this allows me to keep some position in place, now at a better cost basis, and if think, man it is going to drop like a stone, then I sell the other half or 40% and get out of the way of the crash….waiting to buy it back again when it looks a intermediate or short-term support level has been hit.
That’s just my approach on hedging using a tiered system. It limits some of the upside of just going all in and selling all at once, but it is faaaarrrrr less risky. That is important for me personally.
I apologize for the broken English. I was trying to rush because guest are coming over that don’t give a hoot about investing in PM miners 🙂
Hopefully ya get the idea of the tiered approach I was trying to communicate.
Best of luck everyone in your investing after the 3 day weekend!
Or alternatively, if you’ve doubled, sell half and the remaining shares have a cost basis of zero basically….again this is IF you believe in the stocks for the long haul and that we’re coming out of vs. going into or deeper into the bear market.
Nothing wrong with taking profits for sure, just interested in your thoughts on alternative approaches if you have a great stock heading into a bull market
Excellent approach, Jay. I did this myself on a number of stocks, and just sold NUGT and JNUG and bought some DUST and JDST (will sell more PM stocks, buy more ETFs… just waiting/hoping for the rally to continue a little longer).
Two concerns overall though:
– In a market collapse the PM stocks are likely to sell off along with everything else;
– Counterpart risks for derivative instruments may break out in a market meltdown, rendering hedging ETFs value to be limited as those on the other side will not be able to pay.
These are the things that worry me and make me want to go to cash and wait for great buying opportunities (assuming I can do so, before The Death of Money).
Jay, yes that is also a great strategy. I actually have a few stocks at a $0 cost basis right now, but even then, if they look like they’ve topped out for the intermediate, then I’ll sell a portion, and buy this portion back on a dip down. Also if I have a a $0 cost basis, and the stock really pulls back temporarily, but I believe it is going high in the mid-term, then I’ll start averaging into a larger position on the pull backs on the way up to gain exposure to a stock or ETF I really feel confident about.
Risk management and capital preservation are key, as is knowing when to hold em’ and when to fold em’. : )
An excellent advice that everyone should listen. Thank you Doc.
P.S. your technicals helping us a lot.
Thanks Doc!
The commercials on the COT for this week—on the short format of the disaggregated report the silver net short position has increased about another 8000 short contracts and the gold net short position has increased about another 12000 short contracts. You must understand that is before the big move by gold earlier this week. Next week will be interesting on the next COT. http://www.cftc.gov/dea/futures/other_sf.htm
Doc,
Haven’t been in the office today. What is the total commercial short position? I only get nervous when it goes over 300,000.
Your tax forms claim it is a garage. Online you say it is an office. You will have to come in and speak with one of our agents to sort this out Mr Savage.
Big Bollocks….One flew over the cuckoo’s nest.!!!!!!!!!!!!!!!
commercial shorts at 226,000. Still plenty of room to rally before we need to get nervous, although that number was as of Tuesday when gold was $80 lower.
We should get a drop into a daily cycle low soon. Maybe starting next week. Then I think we get another leg higher that may be as big as the first leg.
Thanks Gary.
I agree with Gary completely.
DOC
Here is a nice chart illustrating your point (from Gold Tent TA):
http://goldtadise.com/wp-content/uploads/2016/02/gold-daily-COT-1.png
Thanks for posting that. I’ve seen some of the older versions of that and it has been a good indicator using the the COT.
This rally in gold likely has a long way to go. Since this is almost certainly the start of a new bull market, the weekly chart is likely to become overbought for an extended period. Right now, it is not overbought but the daily chart is. Pullbacks could be sharp but most likely, they will be brief. Either way, miners should be bought (not advice).
I agree with that, as long as we are definitely in a new bull market. I’m about 75% convinced at this point (taking out 1308 on a closing basis would get me to 100%).
If however this is still just an insanely strong short-covering fueled pent up counter trend rally, then there still is a chance this is a bull trap.
I’m going to play it for now as if we are in a new bull market, but still have some hesitation in the back of my mind until Gold takes out 1308.
http://news.goldseek.com/GoldSeek/1455205462.php
Praise for Rick.
+1
Thanks for the article CFS.
Rick is pretty low profile, but he does a great job.
LPG
GOLD LOOKIng GOOD UP in 30days…….$144…….13.21%
I have to disagree with James Flanagan. I believe the miners look much better today than they did in 2001. When priced in HUI (the gold bugs index), gold is a big monthly chart sell:
Interesting article on the minors. Hope he right 🙂
http://www.321gold.com/editorials/hamilton/hamilton021216.html
Thanks Alan, great article. I agree with Adam and like the fact that few do. The miners are in for one heck of a ride over the coming years.
“Gold’s impressive 13.9% rally in 7 weeks since mid-December translated into a radically-larger 78.9% increase in gold-mining profitability! Gold is always gold stocks’ key.”
“After such an anomalous secular period of gold stocks underperforming gold, they are long overdue to outperform gold for years to unwind this gross Fed-conjured distortion.”
“It’s impossible to overstate just how much things have changed in gold stocks in the past couple months, where they’ve gone from the most-despised sector on the planet to the best performers by far in 2016.”
It should be interesting if the gold price holds up in Quarter 1 to start seeing better earning from the minors and for wall street to wake up and start buying them.
Wall Street is already positioned. Take a look at Barrick’s largest institutional owners, for example:
The big boys even have exposure to little GPL:
http://investors.morningstar.com/ownership/shareholders-major.html?t=GPL®ion=USA
Be sure to click on “Institutions” for each link since the page defaults to “Funds.”
Matt, as far as institutional guys 1st Eagle ( probably the most respected of all aficionados in the gold space) & Blackrock both enhanced their positions late in 2015.
Thanks for the reminder. That’s Jean-Marie Eveillard’s fund. He’s the senior investment advisor.
I sold out my Netflix a 2nd time near the end of the day on the buying frenzy that happens after 3pm.
http://www.zerohedge.com/news/2016-02-12/americas-corrupt-media-%E2%80%93-how-reporters-took-direct-orders-hillarys-staff
Is it surprising that very few (there’s always a number on the lefthand side of the Bell curve) trust the media anymore.
cfs…Anybody who believes in what the MSM says should have their brains removed the same way the Pharaoh mummy markers did.
makers
I did say they were on the lefthand side of the bell curve. they don’t have much grey matter, poor things.
Meanwhile in England. Bail ’em out, knock ’em down, and please string ’em up.
http://news.yahoo.com/u-uk-likely-charge-multiple-banks-libor-rigging-185708453–finance.html
DO YOU ALL REMEMBER ! https://www.youtube.com/watch?v=cEA5aTGEwjA
Does anyone follow Gary Wagner?
http://thegoldforecast.com/video/gold-tripped-higher-oil-and-stronger-equities
Yes, I’ve followed Gary Wagner for years. He is good using the japanese candle stick menthods in combination with Elliot Wave. Many think he is a goof, but I always check out what he has to say on Kitco interviews, get his daily emails, and watch his weekend videos.
Gary total Commercial Short contracts 340k
Texan Mike, I believe that number will swell to at least 420k and total combined open interest will go to over 700.
Gary this from 321 Gold
Two weeks ago:
On January 30, 2016 at 10:02 am,
Matthew says:
Things are shaping up nicely for a bullish outcome for the XAU…
Weekly:
XAU was 45…
On January 30, 2016 at 10:04 am,
Matthew says:
The daily chart looks good and is getting better:
Interesting on Institutional tab. Thanks Matthew!
Hey Mr. Temple. The aliens have landed and are real. http://media.tfmetalsreport.com/audio/ABX+Launch.mp3
Great comments by all………..appreciate………..nice week, nice close…