Gold Breakout Today (4/1/10) - Long Term
- Thread starter PaulRon
- Start date
Sure I understand the currency effect as both gold and oil are priced in dollars. But that doesn't explain more than a small part of the gold-oil correlation.
It looks like the gold market is dominated by commodity funds who are buying oil and all other stuff together with gold. And that bothers me. The commodity funds should just go away and die.
It looks like the gold market is dominated by commodity funds who are buying oil and all other stuff together with gold. And that bothers me. The commodity funds should just go away and die.
I agree that "hope" is no strategy, but I took the position with a fairly long term mentality. I guess I didn't bail because I had seen nothing from the chart, to make me think that this wasn't just some consolidation before another run up. "Hopefully" that turns out to be true.
I don't know much about options as I haven't taken the time to learn much about them other than the very basics, so I haven't considered that.
Do yourself a huge favor and learn about selling covered calls. Its an excellent strat for long term investors. When you have long term stock positions that are going nowhere/down and you dont want to sell you can create income that will reduce cost basis. It is a conservative strat that many have built wealth using.
I may have to look into that. What is the learning curve like? I work a full-time job and position/swing trade stocks, etf's and mutual funds on the side, so how labor intensive is it?
One thing I've always wondered about (options) is that essentially if it is a hedge (covered position), then how do you make money? If I'm long stock and sell calls, won't all of my profits from my stock position be eaten up with my calls?
That's probably a very novice question but with no option experience, it's the first thing I think of with covered positions.
It is not labor intensive at all or I should say not more than any other investment. But you should buy a book such as "options as a strategic investment" by Lawrence Mcmillan.
When you sell the call you garner the income when it expires/or stock is "called away". So if the stock falls and they expire worthless you get the premium straight up and then write another one next month out(or however far you go) or if you get called away as the stock rises you garner the premium plus the spread between your avg price and the call strike price.
Example - You sold a 120 call @ 2.00 vs your 117 avg price. The stock runs to 121..you get called away. You made $500 per contract/100 shares..200 on the prem/300 on the spread. Then you either reload or not depending on your investment thesis. either way you made the 500 and lost your position.
Or - You sold a 120 call @ 2.00 vs your 117 avg. The stock falls to 113 by expiration. The call expires worthless. You garner the $200 premium. And have reduced your costs basis to 115 less commission. Rinse repeat.
Is it perfect? No, but what is? Do you reduce any possible additional upside move to the spread + prem? Yes. But for real long term investors it is a great way to add to the bottom line very conservatively.
You're a bit early. Yes, there is a clear breakout of the down trendline.
However, the short term chart (daily since Mar 3) and the weekly chart since December is still making lower highs and lower lows.
I'd be bullish short term if it closes above 1135 and very bullish with a close above 1146.60
In the past 2 months the price has sold off 4 times from this level and only closed above this level for 4 sessions.
I have no position yet but next week is a great opportunity to get long or short based on the chart. IMO the dollar will resume it's rally and the gold breakout will fail. If I'm wrong, I'm long!
However, the short term chart (daily since Mar 3) and the weekly chart since December is still making lower highs and lower lows.
I'd be bullish short term if it closes above 1135 and very bullish with a close above 1146.60
In the past 2 months the price has sold off 4 times from this level and only closed above this level for 4 sessions.
I have no position yet but next week is a great opportunity to get long or short based on the chart. IMO the dollar will resume it's rally and the gold breakout will fail. If I'm wrong, I'm long!