Given the market’s behavior in the last several sessions and European officials inability to sooth investors nerves, we’ve become more cautious. Yesterday we closed our Barrick Gold (ABX) January 50 call option for a 46 percent gain in six weeks. We also sold the SPDR Oil & Gas Exploration and Production ETF (XOP) for a 9 percent loss.   We replaced those positions with the Russell 2000 ETF (IWM) November 66 put option as a hedge against the market taking a steep dive on Europe’s woes. The option can still be purchased at its current price.   We are still long a couple of positions, including two ETFs that own gold and silver, the SPDR Gold Trust (GLD) and iShares Silver Trust (SLV). If the market does fall, the metals will decline far less. And any solution to Europe’s troubles will entail pumping more money into the system, which will bolster these ETFs well in advance of the raging inflation that will follow.   We’re also still maintaining our positions in the Market Vectors Gold Miners (GDX) ETF, as gold shares continue to display excellent relative strength. Having pulled in somewhat after breaking out to a 52-week high, the next leg up should carry the GDX to the $70 area.   Read More

Sell the SPDR S&P Oil & Gas Exploration & Production (XOP) ETF and Sell to close the Barrick Gold (ABX) January 50 call option at the market. Buy to open the iShares Russell 2000 Index ETF (IWM) November 66 put option using a limit order set at $5.15. Read More

The only change to our holdings since the last update was the sale of the Garmin (GRMN) January 30 put option after the underlying stock had broken out of its downtrend. Our remaining trades are well suited to the climate we find ourselves in.   Gold climbed to a new record high this morning before backing off somewhat. But given the uncertainties investors are faced with, the metal trading near $1,900 an ounce is still quite attractive, which is why we continue to recommend the SPDR Gold Trust (GLD), along with its silver counterpart, the iShares Silver Trust (SLV).   Last week we said we would like to see Barrick Gold (ABX) trade above $51 for a couple of days running. It has since done that and now appears to be on its way to its previous highs near $56. Our Barrick Gold (ABX) January 50 call option will continue to profit along the way.   Our Market Vectors Gold Miners (GDX) ETF, on the other hand, has broken out of its trading range and could quickly climb to $70 or so. And there’s even more upside potential to our equity positions in Gabriel Resources (GBU.TO, GBRRF) and NovaGold Resources (NG).   Read More

Sell to close the Garmin (GRMN) January 30 put option at the market. Read More

The Barrick Gold (ABX) January 50 call option is our most leveraged of these positions. We would still like to see the stock close above the $51 level for a couple of consecutive days, which would clear the way for a move to its previous highs in the mid $50s. The Market Vectors Gold Miners (GDX) ETF likewise appears ready to take a stab at the mid $60s. Our more aggressive small-cap plays, Gabriel Resources (GBU.TO, GBRRF) and NovaGold Resources (NG), offer even more return potential, percentage-wise.   Finally there is the metal itself, via the SPDR Gold Trust (GLD), as well as its silver analog, the iShares Silver Trust (SLV), both of which should remain top performers going forward. And if we’re wrong on the stock market’s direction and shares tank for some unforeseen reason, the metals should act as a safe haven.   Our other commodity play, the SPDR Oil & Gas Exploration and Production ETF (XOP) faces mild overhead resistance in the $54 area, but once through that it could quickly climb to around $58. Given the strength in crude oil, and assuming natural gas prices don’t collapse from here, a move in the ETF even higher seems likely in the next few months. The position remains a buy for new clients at its current price.   We’re still holding the Garmin (GRMN) January 30 put option, but we’re watching it closely. The stock has displayed decent strength in the last several sessions and could temporarily be pulled higher with the rest of the market. Be ready to dump the position on our signal if need be.   Read More