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« Gold Miners Can Rally Even Without Gold: Weeden | Main | Full Refund If The Next $200 Move In Gold Isn’t Higher »
Tuesday
Sep182012

Another Week, Another 60.71% Winner for SK Option Trader Subscribers

Just 9 days from closing our latest winner, we’ve closed another trade for a 60.71% return in 100 days.


This trade was exactly the same as our previously closed vertical call spread. The difference in profit between the two trades is a consequence of different entry and exit points.

Following an extremely weak payrolls announcement on the 1st of June, we placed this trade on the 4th June, speculating that poor employment would push the Fed to embark on QE3 and send gold prices higher. This is what we communicated to subscribers at the time.

To summarise, exactly what we said on June 4th has come to fruition, and may be of interest to keen market followers.

“The expectation for the May payroll announcement on Friday was 150,000. The actual number came in at 69,000 – a huge miss compounded by sizable downward revisions of the March and April numbers...

We’ve been talking about the importance of seeing disappointing payrolls data before committing to a long position on gold for a while now. With Friday’s payrolls flop, we have all the elements required to get long gold and will most likely do so this week in the form of GLD call spreads.

We have been on the side lines for some time, but now we think it is time to get back involved. We are now fully in the bullish camp for gold and it feels good to be back.

Given current record low real interest rates, one of our pricing models predicts gold should be just over $1900.”

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We went on to say;

We think the Federal Reserve is more competent than the ECB and therefore more likely to act. After Friday’s employment data, Bernanke now has more room to move. The Fed has left the door open to further easing if the data turns. The data has turned and Europe is threatening to drag the global economy, including the US, into another recession.”

To be really effective we think QE3 will need to create money, not just shift it around like Operation Twist. Although stocks have performed since Operation Twist, this was more due to the LTROs from Europe and in our view Operation Twist was largely ineffective.

Buying more treasuries will not do much good. Businesses are not going to hire new workers just because the US 10 year yield is lower. The yield curve needs no flattening, what is needed is direct injections of cash into more risk credit instruments such as mortgages. By purchasing mortgage securities that encourages new mortgages to be originated one could provide a meaningful boost to the US economy. We are not saying this is the right thing to do, we are merely attempting to determine what will happen in reality since this is the most use to us as a trading operation.”

QE3 was announced on Thursday the 11th of June; just as we predicted way back in June. We foreshadowed the driver (poor payroll data) and even predicted the format easing would take. Gold is now up around $1770 and if it performs in a similar manner as it did over QE 1 and 2, it could be headed for $2300 or even higher if the program lasts longer than the 3 years many anticipate.

Initially after placing this trade gold trended sideways for several weeks and we sat on a small loss. We stayed strong to our belief in QE3 and didn’t close the position out defeated. Instead, we doubled up getting in even cheaper than before.


This trade marked a big milestone for us and our subscribers alike. Since August 2009 we have generated 505.98%. We have never had a losing year.

Over the same time frame gold has risen 86.62%, the S&P 500 45.72%, and a basket of the biggest gold mining stocks only 38.83%.

$10,000 invested in 2009 would now be worth $60,598, simply by following the trades we place on our own accord. Our subscription fees would be covered many times over.

Compounded returns help facilitate our success with the profits from all our closed trades being reinvested back into the portfolio. To maximise compound returns, it pays to start investing as soon as possible so don’t delay.

One of our recently opened trades is up 40% in only 11 days. To see what it is and all our future trades, subscribe now.

We have no plan to take our foot off the gas, there are many exciting trading opportunities ahead so sign up now to get on board!

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