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Monday
Oct062008

Agnico-Eagle Mines Call Options: Bought!


AEM Call Options 07oct08


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.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter, just click here.




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Reader Comments (3)

Well I am four sheets to the wind. I've got foremast, mainmast, mizzenmast, and jigger mast flying. So these jack- asses can't keep suppressing the price of aurem metallica forever. These City of London wise guys are going to be beaten about the head three times over as far as the market is concerned. No one is going tell me snow is black. Either I am as crazy as Guy Fawkes attending an Orange men march or King James I was actually a heterosexual, but I 'll be damned if gold is worth only worth 800 and change.

October 6, 2008 | Unregistered CommenterDavid

I don't necessarily disagree with you, but the plain fact is that for whatever reason gold just hasn't performed, and silver has been battered out of all proportion.It is often difficult to do an investment U turn ,but most long term holders of Gold/Silver stocks should have stopped themselves out out by now. Soon they'll have lost the major portion of their wealth , as is the case with this newsletter. My belief is that gold will quickly fall to the U$ 600-650 level as investors scramble to liquidate all assets, including gold. Then I'll take another look.

October 7, 2008 | Unregistered CommenterMike- UK

OK, newsletter: Mike says you've lost the major portion of your wealth, True or false? Neil

October 7, 2008 | Unregistered CommenterNeil Bishop

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