The Chart The Permabulls Don't Want You To See...
Now ask yourself, WHY hasn't this chart been plastered
all over the gold bug boards?
That chart is TA 101.
Yet it's being ignored, as if it doesn't exist.
Why haven't the permabull pundits & gold bug gurus
talked about that chart, or talked about "how" to protect
your portfolio... if, or when, gold simply returns to it's
longterm trendline?
Last week I wrote about goldbugs looking at their gold
positions as insurance -- instead of the one thing they
needed to be insuring.
The same thing applies to commodities in general, or
anything else one is "portfolio weighted" to.
If you are over-weighted to anything - that's
what you need to be insuring, or hedging in a market
like this.
You insure exposure.
Even insurance companies -- insure their insurance,
because for them -- it's not insurance, it's their asset base,
it's their exposure, and that's what they insure.
And if you are over-weighted to gold, oil, or
commodities here, that's not insurance, it's your
asset base, and that is what you should be insuring.
I'm still short half of our original position on the HUI
470 trading range turn. And I am buying weakness very
selectively -- "as a hedge to that short" - and buying
time via 2009 calls & 2010 LEAPS.
I've set trailing stops on my shorts at HUI 380, as old support
at HUI 370-400 for the HUI, may now become new resistance.
I'm not worried about missing gold stocks going to HUI 450-470,
because we've "been there & done that" innumerable times
via "the trading range" trade.
What I'm worried about is missing a potential HUI 700, or 1000,
a year, or two from now vs. risking a fully weighted long-
sided portfolio to capturing a bounce trade, into collapsing
fundamentals.
One thing I am not reading anywhere - for those who are
portfolio weighted to gold, and who are not "short-term"
active traders... is the trading strategy of not buying,
or chasing weakness here, but rather waiting until gold,
or gold stocks break out to new highs and buying
that strength (on a portfolio weighted basis).
(Remember my "little green circles chart? More on that later.)
Are there flip/bounce trades to be made here?
Sure.
But, I'd be banking the profits - and taking only a
portion of those profits and buying upside potential
via calls in the majors, and "non-expiring" options
via badly beaten down juniors and explorers.
Is the dollar due for a correction, and oil for
a bounce? Sure. But, that's a short-term trading
event - not a portfolio weighting event.
Sadly, your portfolio should have already been
re-weighted.
If you've followed my "trading range" trade... there's
nothing to fight for here. This is a high risk:low reward
environment, and as I mentioned in this post below that
you may want to re-read one more time...
Message 24849391
The fundamentals for gold -- have changed.
-- The Fed has slowed the expansion of money supply.
-- The Fed has ended it's rate cut campaign.
-- The Dollar has held it's bottom, and is now rallying.
-- The US and global economies are slowing.
-- Commodites are correcting, and oil has finally collapsed.
-- And the US is still experiencing a deflationary
collapse in housing, and financial assets.
Until the fundamentals change again (for the positive),
we're going to establish a new trading range for gold &
gold stocks, and once again, the danger to buying this dip
for anything other than a short-term trade, is that former
support at HUI 370-400 - once again becomes resistance.
I'm buying very selectively here. And what I am buying is
junior/explorers now priced as options (without expiration),
and long dated calls and leaps in the majors -- buying time
with highly levered upside.
The danger here, is that commodities, and gold return
to their longterm trendlines. And if they do, there's
still a long way yet to go.
Be careful out there...
Don't let buy and hold turn into - buy and fold.
S.O.T.B. |
