Trading Comments: Start Building A Position

The last several weeks have been good ones for everyone who has a long-term cost-averaging plan for accumulating the precious metals because prices over this period have been exceptionally low. And the bull market in gold and silver (and bear market in fiat currencies) remains intact. I therefore continue to recommend that everyone save money by accumulating physical precious metals.

Traders have been on the sidelines. But traders can again look to start building a position. This year is starting off like last year, with the low in prices made early in January. But one more test of support at $1650 and $31 is possible.

Gold
1) The position bought at $1,714.10 on the Comex close on November 6, 2012 was sold on December 4, 2012 at $1693.90, which was its stop-out point. Loss: $20.20

2) The position bought at $1,692.00 on November 6, 2012 was sold on December 4, 2012 at $1693.90, which was its stop-out point. Profit: $1.90

3) The position bought at $1,679.50 on November 6, 2012 was sold on December 5, 2012 at $1687.90, which was its stop-out point. Profit: $8.40

4) Buy one position at the market. Gold is presently trading at $1670.60, so I will use this price for recordkeeping. Stop-out point: sell at an intraday stop-out point if Comex spot gold trades at $1657.50.

5) Buy one position if the Comex spot gold price trades at $1,685.00. Stop-out point: sell at an intraday stop-out point if Comex spot gold trades at more than $28.00 below your purchase price.

6) Buy one position on the first Comex close in New York above $1702.00. Stop-out point: sell at an intraday stop-out point if Comex spot gold trades at more than $30.00 below your purchase price.

Silver
1) The position bought at $30.945 on November 5, 2012 was sold December 18, 2012 at $31.799, which was its stop-out point. Profit: 85.4¢

2) The position bought at $31.25 on November 6, 2012 was sold December 18, 2012 at $31.799, which was its stop-out point. Profit: 54.9¢

3) Buy one position at the market. Silver is presently trading at $31.91, so I will use this price for recordkeeping. Stop-out point: sell at an intraday stop-out point if Comex spot silver trades at $31.62.

4) Buy one position if the Comex spot silver price trades at $32.25. Stop-out point: sell at an intraday stop-out point if Comex spot silver trades more than 55¢ below your purchase price.

5) Buy one position on the first Comex close in New York above $32.40. Stop-out point: sell at an intraday stop-out point if Comex spot gold trades at more than 50¢ below your purchase price.

Gold/Silver Ratio – Traders unwound at 55.5 on December 20, 2012 the ratio they sold at 54.1 on November 5, 2012. The loss was 1.4 ticks, or 2.6%.

Traders should sell the ratio (buy silver and sell an equal dollar amount of gold). I’ll use today’s NY close for recordkeeping. Stop-out point: Unwind this trade on the ratio’s first Comex close in New York above 56.0.

Comex options (options are high-risk and therefore not for everyone):
The Dec’12 Comex 1800 and 2000 gold calls and the Feb’13 Comex 1800 gold call expired out of the money. The Dec’12 Comex 40 silver calls expired out of the money.

The Dec’12 Comex 32 silver call bought at $1.527 on the May 11, 2012 Comex close was sold at expiry at $1.981. Profit: 45.4¢

Long one Mar’13 Comex 32 silver call from $1.474, the November 5, 2012 Comex close.

Buy the Dec’13 Comex 1800 gold call at the market. Buy the Dec’13 Comex 35 silver call at the market. I’ll use today’s NY close for recordkeeping.

Hold all these calls without any stop-out point, but sell the Mar option on expiry if in the money.