A murderous day for the markets as equities were dumped aggressively, including precious metals stocks which also took a massive hit. We took the view that this was a buying opportunity and so purchased the JAN09 Call Options with a strike price of $55.00 for $4.28 per contract.

It was interesting to watch the days trading unfold with the FTSE and the DOW both being sold off dramatically, gold was gaining but the precious metals stock were also being dumped. This sort of behaviour is the result of panic selling in general with the baby going out with the bath water.

As it is one of our favourite quality stocks we focused on Agnico-Eagle, which hit a low for the day of $39.61. At this point we could not tell if it was the bottom or not but a reversal began to take shape. As the recovery firmed we took the plunge and bought Call Options. This is a trade that we mentioned we were considering on 03 October 2008 when we were looking for a cheap entry point.

We still anticipate that gold will challenge its old highs by the end of the year and this move fits in with our strategy of deploying our opportunity cash to take advantage of gold’s rally.

If you have the time watch James Turk on BNN, there is a short interview but he also expects gold to make new highs by the end of the year.

Got any comments? Then fire them in!

Agnico-Eagle Mines Limited trades on the NYSE under the ticker symbol of AEM and on the Toronto Stock Exchange under the symbol of AEM.TO.

Trading decisions belong entirely to you as your circumstances are different from ours and we trade to suit our investment criteria and cash position.

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