Will Gold’s Latest Rally Stick?

Will Gold’s Latest Rally Stick?

Sentiment extremes should be on the radar screen of all investors. That’s because they can point to buying opportunities and sharp reversals ahead.  The latest action in the gold market is a perfect example of this.

Just a few short weeks ago, year-end tax loss selling was in full force and universal hatred for precious metals (NYSEARCA:GLTR) took gold to bearish extremes. It’s these very bearish or sentiment extremes that can give investors and traders a safe entry point to go long.

Our ETF Weekly Pick issued on 12/26 wrote:

“Once year-end tax loss selling is over, we’re anticipating a bounce in beaten down gold miners in January. It remains to be seen whether this bounce will become a bigger trend change for Market Vectors Gold Miners ETF (NYSEARCA:GDX) from down to up, but it’s nevertheless a short-term profit opportunity for aggressive contrarians.  Our tandem options trade is to buy the GDX JAN 2013 20 call options (GDX140124C00020000) at around $140. The call options expire on Jan.24, 2014.”

GLD JAN 2014 Chart

Via our two intraday trade alerts, we bagged a 26.5% two-week gain on our GDX calls.

Since Dec. 19, SPDR Gold Shares (NYSEARCA:GLD) has rallied 3.17%, the Market Vectors Gold Miners ETF (NYSEARCA:GDX) has jumped 3.76%, and Market Vectors Gold Miners Junior ETF (NYSEARCA:GDXJ) is ahead by 7.13%.

It’s still too early to tell whether gold’s latest rally will morph into an official trend change reversal from down to up, but thus far, it’s been a good trade.

The ETF Profit Strategy Newsletter uses technical, fundamental, and sentiment analysis along with market history and common sense to keep investors on the right side of the market.  In 2013, 70% of our weekly ETF picks were winners and our biggest gainer was a 525% profit.

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4 comments on “Will Gold’s Latest Rally Stick?
  1. DavidinTokyo says:

    Thanks Ron.

  2. Ron the Editor says:

    Nice to hear from you David and hopefully you’ve been following our gold trades. So far, it’s been a great 2-3 week trade. The problem with bullion is that it’s historically had long periods of boom and bust. And right now, we’re in the period coming off boom of 12 consecutively yearly gains (2000-12). I’m hesitant to believe that gold will immediately bounce back for a sustainable rally, but we’ll let prices tell us the answer. In the meantime, metals for three years now have been a better trade than buy-and-hold investment.

  3. Adam Satori says:

    Hi Ron & Chad,

    Although (after coming back from holiday with no computers:-)I was too late to trade gold, but as they say: there always be a next opportunity 🙂
    You’re doing a great job/service & I’d like to congratulate you, hoping that our ‘professional’ relationship will run like forever:-)

    Thanks again for everything & all of the best,

    Adam S

    • Ronald Delegge says:

      Hi Adam, We’re glad you’re enjoying your subscription and we hope our ideas will make you some $$$ this year.
      Best,
      Ron

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