On January 25th, 2010, we purchased more stock of Agnico-Eagle Mines Limited (AEM) at an average price of $53.24 and we also acquired a few Call Options and they are the MAY 2010 series at a strike price of $60.00, symbol AEMEL for which we paid a price of $2.85 per contract. At the close of trading in NYC today the last price for these Options was $3.10 so we finished in positive territory by about 9%.
If gold prices can continue to head north for a few more days then Agnico-Eagle could do well and these options should behave accordingly in a leveraged manner increasing our possible profits on the trade. Should this happen in the next day or so we will place a sell order with a 'stop' in order to lock in some of the profits and avoid a loss if the market moves against us.
Taking a quick look at the chart we can see the RSI has hit '30' and bounced off it, which is a good sign. The STO is heading north from a low level and a crossover on the MACD would be positive for AEM, in the short term.
On our silver-prices site we recently wrote the following:
Sticking our necks out we don’t expect to see the dollar go much higher than ‘80′ however as the broader market sells off the dollar strengthens. As a currency we think that its future is bleak, but the alternative currencies especially the Euro appear to be performing just as badly with problems in Greece and Spain grabbing the headlines. As currencies go its a race to the bottom with the occasional upward spike to keep us all on our toes.
Gold is still a 'dollar' play so keep at least one eye on it.
All the best.
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