Gold, Silver Could Make New Lows By Year's End

The last two attempts to pick a bottom met with mixed success. We correctly indentified the low, but didn’t make any money trading it. Maybe the third time will be lucky. Traders have again been sitting on their hands for a couple of months, but now is the time to buy.

I think there is still a good probability that either gold or silver (perhaps both) might make a new low before yearend. The sell stops under the June lows are no doubt a tempting target for the gold cartel; triggering them will give the cartel more opportunity to cover some of their shorts. But the market is so overstretched to the downside at the moment, a rally from here seems the more likely alternative.

Gold
1) The position bought on the Comex close at $1,369.40 on September 19, 2013 was sold on September 20, 2013 at $1339.40, which was its stop-out point. Loss: $30.00

2) The position bought at $1,338.00 on September 18, 2013 was sold on September 24, 2013 at $1312, which was its stop-out point. Loss: $26.00
3) The position bought at $1,295.00 on September 18, 2013 was sold on October 11, 2013 at $1272, which was its stop-out point. Loss: $23.00

4) The position bought at $1212.50 on July 5, 2013 was sold on October 11, 2013 at $1265, which was its stop-out point. Profit: $52.50.

5) Buy one position at the market. Gold is presently trading at $1193.50, so I will use that price for recordkeeping. Stop-out point: sell at an intraday stop-out point if Comex spot gold trades at $1,187.50.

6) Buy one position if the Comex spot gold price trades at $1,208.00. Stop-out point: sell at an intraday stop-out point if Comex spot gold subsequently trades at $1,192.

7) Buy one position if the Comex spot gold price trades at $1,224.00. Stop-out point: sell at an intraday stop-out point if Comex spot gold trades at more than $22.00 below your purchase price.

Silver
1) The position bought on the Comex close at $23.242 on September 19, 2013 was sold on the Comex close on September 20, 2013 at $21.876, which was its stop-out point. Loss: $1.366

2) The position bought at $22.08 on September 18, 2013 was sold on September 20, 2013 at $21.58, which was its stop-out point. Loss: 50.0¢

3) The position bought at $18.85 on July 5, 2013 was sold on September 20, 2013 at $21.65, which was its stop-out point. Profit: $2.80

4) Buy one position at the market. Silver is presently trading at $19.195, so I will use this price for recordkeeping. Stop-out point: sell at an intraday stop-out point if Comex spot silver trades at $19.07

5) Buy one position if the Comex spot silver price trades at $19.68. Stop-out point: sell at an intraday stop-out point if Comex spot silver subsequently trades at $19.35

6) Buy one position on the first Comex close in New York at $19.92. Stop-out point: sell at an intraday stop-out point if spot silver subsequently trades $19.42.

Gold/Silver Ratio – On September 24, 2103 traders unwound at 61.4 the ratio (they bought silver and sold an equal dollar amount of gold) at 59.0. The loss was 2.4, or 4.1%.

I recommend that traders sell the ratio (buy silver and sell an equal dollar amount of gold) at the market (I will use today’s Comex close for record keeping). Stop-out point: Unwind this trade on the ratio’s first Comex close in New York more that 2.0 ticks above your entry price.

Comex options (options are high-risk and therefore not for everyone):

The Dec’13 calls expired out of the money.

I recommend buying the Apr’14 $1220 Comex gold call and the May’14 $22 Comex silver call. I will use today’s closing Comex price for recordkeeping.