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There's Gold in Them Thar Hills

9/12/2014 6:17:30 AM

Good morning Traders,

Since we updated our option position on oil yesterday, here's an update on our GOLD position (based on our research).

If you recall, back on 8/21, we made the following recommendations:

Gold Options Table

Here's an update to the value of those options - both around 100% in returns!

Gold Options Table 2

And here are the November PUTS:

Gold Options Table 3

What about the future of gold?

Well, as we've shown earlier, gold is breaking down but the majority is positioning for it. Here's one of our indicators which we used to get into the position:

Gold to Gold Options Volume Ratio Chart

Gold is making a serious run at the lows here, and you would expect it to retest the lows here. As it does, volatility will pick up and the options will increase in value. If this indicator turns back higher, it looks like we'll have to wait a little longer for the larger crash in gold, but the conditions are still ripe - so gold could still break lower.

On the stock market, one of the key things happening right now is that bonds are selling off and stocks are not moving higher. That's bearish for stocks. They should be taking off. But if there are no more buyers, and the individuals have moved into the market (per our indicators) - then a selling vacuum is created. We're still cautious on stocks.

Regards,

 

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