Gold has it bad and that ain’t good. Especially if you’re a goldbug.
Not only has gold officially forfeited it’s year-to-date gains, but over the past month it’s closely shadowed one of the globe’s worst performing assets; the euro (NYSEARCA:FXE).
(Audio) Listen to Ron DeLegge @ The Index Investing Show
Ahead of gold’s (NYSEARCA:UGL) latest pullback, we’ve kept readers ahead of the curve.
Via the Feb. 2015 ETF Profit Strategy Newsletter published on 1/24/15 we alerted readers:
“Since 1996 gold has increased 58% of the time in February and averaged a 1.1% gain. On the other hand, March has been trouble. How are we playing it? Ahead of a pullback, we’re buying the ProShares UltraShort Gold (NYSEARCA:GLL) at $83.75 up to a buy limit of $84.25. GLL aims for double daily opposite performance to gold bullion. Our tandem options trade is to buy the GLD MAR 2015 124 put options (GLD150320P00124000) at $350 up to a buy limit of $375. The puts expire on March 20, 2015.”
How did it work out?
On Feb. 3, we exited the GLD MAR 2015 124 puts at $490 with a +32% one-week gain.
On Feb. 18, we followed up our GLL and GLD put options buy alerts via our Technical Forecast, with Chad Karnes, Chief Market Strategist warning readers:
“Gold fell hard Tuesday to test its uptrend. If the uptrend holds we can hold out hope that the precious metals have found a tradable bottom, but if it breaks, it opens the doors for another major selloff below $110 for the SPDR Gold Shares (NYSEARCA:GLD) and gold $1,100. Today’s candle formed a bullish ‘hammer’ which suggests the market found buyers here…we shall see. $115 needs to hold.”
We are still long GLL and we’ve been vigilant about increasing our stop loss as the share price climbs. This strategy allows us to protect our downside while letting our winners run.
Another successful trading strategy we continue to use on both GLD and gold miner ETFs (NYSEARCA:GDXJ) is to collect income by selling out of the money call options. We bagged a +100% gain on our GDXJ FEB 2015 33 call options (GDXJ150220C00033000) because GDXJ closed below $33 on 2/20/15 expiration and the options expired worthless.
Follow us on Twitter @ ETFguide