I’m normally not sending anything over the weekend, but this time it seems really justified and that you’d appreciate it.
You might be wondering if not closing GDXJ (or JDST) before the end of the session was a good thing to (not) do. After all, none of the prices that I mentioned in Friday’s intraday Gold & Silver Trading Alert was hit – neither in case of the GDXJ ETF, nor in case of gold.
In short, it seems that it’s good that these positions were not closed, and I’m adjusting their exit targets by restoring the original GDXJ ETF target of $42.72 and I’m making the adjustment in case of JDST’s target to $13.79.
Gold closed at about $1,730 and it seems that it could move another $50 lower (to $1,670 - $1,680 or so) before it finally bottoms. However, if gold moves to $1,693, I will already view it as “low enough” to justify exiting the remaining short position in the mining stocks (or anything else in the precious metals sector).
The GDX ETF might move even lower on a very temporary basis, but I don’t think that getting back on the short side in case of this instrument is justified from the risk to reward point of view – at least not before it corrects.
To further clarify, below, you fill find the updated description of the “Trading capital” from the summary of the upcoming Monday’s analysis:
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Trading capital (supplementary part of the portfolio; our opinion): Full speculative short positions (300% of the full position) in mining stocks is justified from the risk to reward point of view with the following binding exit profit-take price levels:
Senior mining stocks (price levels for the GDX ETF): none
Junior mining stocks (price levels for the GDXJ ETF): binding profit-take exit price: $42.72; stop-loss: none (the volatility is too big to justify a SL order in case of this particular trade); binding profit-take level for the JDST ETF: $13.79; stop-loss for the JDST ETF: none (the volatility is too big to justify a SL order in case of this particular trade)
For-your-information targets (our opinion; we continue to think that mining stocks are the preferred way of taking advantage of the upcoming price move, but if for whatever reason one wants / has to use silver or gold for this trade, we are providing the details anyway. In our view, silver has greater potential than gold does):
Silver futures downside profit-take exit price: unclear at this time - initially, it might be a good idea to exit, when gold moves to $1,693.
Gold futures downside profit-take exit price: $1,693.
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Moreover, even if none of the above-mentioned targets are reached, but gold moves to $1,693, I think that closing any remaining positions would be justified from the risk to reward point of view, anyway.
Additionally, if gold moves to $1,692, I think that LONG trading positions in GDX will be justified from the risk to reward point of view with $32.39 as the next target.
Alternatively to GDX – if one seeks to gain leverage, one might consider going long (when gold moves to $1,703) NUGT (2x leverage) or GDXU (3x leverage – not recommended for most due to the significant leverage, but might be interesting tool for more advanced traders).
The size of position for this very quick long position would be regular.
We are not using GDXJ here for the sake of simplicity in case of this quick trade and because GDXJ didn’t reach support that’s as strong as the one that the GDX ETF just reached.
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As always, we’ll keep you - our subscribers - informed.
Thank you.
Sincerely,
Przemyslaw Radomski, CFA
Founder, Editor-in-chief
