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« Golden Buying Opportunity, With a Silver Lining! | Main | Precious Metals: Timing! »
Wednesday
Aug062008

BUY GOLD, Call Options

We are hereby signalling a BUY on gold and gold call options, as we believe the yellow metal is oversold and poised for a tremendous rally in the coming months.


We have purchased a significant position in the January 2009 call options with a $95.00 strike price for GLD, the gold ETF.
By doing this we are effectively buying call options on gold itself.

Gold has major support around $875 and we see any further downside as limited so we have purchased these contracts at an average cost of $3.40.

We expect these options to generate a return of at least 100%.


This is a great buying opportunity in gold, BUY!


Footnote: Silver is also a great buy, and we purchased more stock in Silver Wheaton today. Please click here to read details.


These are fast changing times and its essential that you stay up to date with what is going on in the market. For our latest commentary and trading signals on gold, click here to subscribe to The FREE Gold Prices Newsletter and click here for The FREE Silver Prices Newsletter.

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Reader Comments (15)

hi, i would like to know how to buy the gold call option as you have stated? can i use online brokerage like TDAmeritrade for that one?

thanks.

August 6, 2008 | Unregistered Commenterrob

We are not familiar with TDAmeritrade as a broker as we are not currently customers. For this specific trade, we used our account with E*Trade.

However if your account offers options on stocks and ETF’s on the NYSE, then you should be able to buy the options on GLD.
We would suggest a search for GLD, or a search within the options section of tdameritrade for options chains related to GLD, to view what choice of contracts your broker offers your.

Unfortunately we cannot provide more details as we are not clients of tdameritrade or familiar with the workings of their online stock broker system.

Any more questions, please feel free to ask.

August 7, 2008 | Unregistered CommenterGold Prices

Interesting......I'm sure TDAmeritrade can help you, I use them.

August 7, 2008 | Unregistered Commenterfg

You guys must have iron stomachs after years of buying these kinds of panics! I have little doubt that you'll see fantastic gains in the next several months as the uptrend resumes and the big momentum traders move back in. The negative sentiment in the precious metals market is as bad as I remember it ever being. This has to mean something. I've learned that buying when I feel sick to my stomach usually leads to big profits, although these markets tend to jump around before they go higher (which means the sickening feeling usually lasts a while.) But you guys know this better than I do. Good luck with your trades, and I'll see you at the party when it gets started!

August 7, 2008 | Unregistered CommenterDBR

when you post buy call options, i wish you would post the fact that you made the SAME SUGGESTION TWO WEEKS AGO!

HL Jan 10.00 1.00 Now .65 cts per contract
KGC Jan 20.00 2.50 Now 1.70 per contract
AUY Jan. 12.50 2.25 Now 1.30 per contract

August 7, 2008 | Unregistered CommenterMichael

To the investor if TD Ameritrade trades options. Yes it does. There platform is very impressive and easy to trade. However if you have no exp. trading in options I highly recommend you stay away from it. Options are a great way to loose most if not all of your money, and i'm an optimist..

August 7, 2008 | Unregistered CommenterMichael

How do you feel about DGP, the Double Gold Long ETN ?
As I understand, this gives you a 2 to 1 return on any increase in the Gold price. Naturally, it has the same ratio going in reverse.

August 7, 2008 | Unregistered CommenterRobert Winfield

Yes DGP is great double long
DGZ short
DZZ double short

DGP is great way to play gold on the up side.

August 7, 2008 | Unregistered CommenterMichael

Michael,

Yes we did make those suggestions two weeks ago, and yes they are down. All of this information is available on our website free of charge for anyone to access and scrutinize. However one must remember that the price of these contracts varies greatly from day to day, often as much as 30% up or down. We are prepared to hold through the volatility and we are confident that our buy signals on options will lead to decent profits in the next couple of months.
It is near impossible to pick the exact bottom in price, but we took a stab and feel that we have come fairly close and that the downside in gold is now limited.
For the record we did also buy Kinross call options just over two months ago, and sold for a 100% profit in 14 days. The price then dropped and so we re-purchased the same contracts.
http://www.gold-prices.biz/kinross-gold-call-options-up-100-in-two-weeks/
http://www.gold-prices.biz/kinross-gold-corporation-buy-call-options/
Of course, only time will tell whether we made the right call on the more recent buy signals!

Robert,

We do like the idea of the double long gold ETF/ETN's. However we have yet to signal a BUY on any such product, but we may do in the future. Stay tuned for updates.

DBR,

We have also learnt that times when you feel sick to your stomach are the times to buy. Just when you feel like giving up and capitulating, that is just the time that you should be loading up because, chances are, you’re at or very near a bottom.
What we are seeing now is some of the classic “jumping around” that you are talking about. Our recent BUY signals will bounce in and out of the red for a while, but in the next few months we think they will bring large gains to our portfolio.
Bring on the party!

Thank you all for your comments, they are much appreciated! If you have a question or something to say, please don't hesitate to post a comment on the website and we will do our best to answer as soon as possible.

August 7, 2008 | Unregistered CommenterGold Prices

hi to all,

thanks for all the help you posted.. yes, i did check (get chain function) and saw the options..
yup, no experience in trading options.. and yes, i know that is very risky :) thanks for the heads up..

my query is.. how do i profit from options?
1) can i sell it anytime before the date?
2) assuming i held it till the date indicated.. what will happen, do i need to exercise the call? i mean buy GLD at $95?
3) @3.20.. is that already price of 1 contract? how much usually is the value of 1 contract?

yes, i've read about the double long here a few months ago and im planning to enter it.. just have to wire some money to my account.. im fully invested in some other stocks.. hehe..

August 8, 2008 | Unregistered Commenterrob

Hi Rob:
I'd like to suggest optionseducation.org, I've just started their "Basic Course." Free educational coarses, (800) help number more. The site is hosted by: The Options Industry Council. Good trading!
Regards,
Mr. Leonard

August 8, 2008 | Unregistered CommenterD. Leonard

HEY,

Im getting more and more concerned about my gold. The KGC options and AUY..along with IAG-AUY-FRG-HRG. I am down significantly on all holdings. Got out of Silver two weeks ago...Thank God...Dennis Gartman who has been a long time gold bull, is completely out of gold. He is very good, and did not paint a very good picture going forward on Fast Money tonight. Sighting what I posted earlier on the silver message board. Being the strong Dollar and declining oil. Any thoughts? My options are already down 40 percent....concerned..Gary

August 8, 2008 | Unregistered CommenterGary

Rob,

D. Leonard makes a good point, there is indeed a vast amount of information about options trading avalible online, mostly free of charge.
We suggest you read as widely as possible and come to your own understanding, before making an investment in any contracts.
Options are more complex than stocks so it is essential that you ensure that you understand how they work.

A quick answer to your three questions;
1) yes you can sell the contract at any time before the expiration date.
2)you can either exercise the contract and take delivery of the shares or sell the contract on, but whatever action you choose must be done before the expiration date as once the option has expired then it is worthless.
3) 3.20 is the price per share in the contract. In this case, the call option states that 100 shares are deliverable, therefore the total cost of one contract is 3.20 x 100 = $320.

Any more questions feel free to ask,

Thank you all for your comments and thanks to D. Leonard for your suggestion.

Great debate guys!

August 9, 2008 | Unregistered CommenterGold Prices

Gary,

I would examine Mr Gartman's record more closely. He has been in and out of gold a number of times in the last 6 months, including an unsuccessful short trade.
Always remember that you and only you have the final say on what happens to your money, always do your own due diligence and come to your own conclusion.
Times like these do make your stomach turn, and we are human so ours is turning also! However, from experience we have learnt that at times like these it is usually best to BUY, hence our multiple buy signals, more of which may be on the way.
We certainly do not think that selling gold or silver is good idea right now, as we think this could be the best buying opportunity of 2008.
We suggest you sit tight, remember that gold bottomed on around August 16th last year, we are a week away from that date.

Hope this helps, any more questions feel free to ask.
Let us know how you get on!

August 9, 2008 | Unregistered CommenterGold Prices

Time to buy 8/12/08

DGP,GDX,AUY,HL,KGC,SLW,CDE...

August 12, 2008 | Unregistered CommenterMichael

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