Posted on June 13, 2019
A few things to consider…
So what are we supposed to make of all this Au-phoria?
Is gold going higher, or no?
And what about our open GLD trade? Do we keep it, or wrap it up?
Let’s start with the charts.
This is weekly paste-up of the SPDR Gold Shares ETF (NYSE:GLD) for the last four years. Note well the three separate pieces of overhead resistance we’ve highlighted (in blue) –
It stacks up like this –
To sum, any action in GLD that does not move above $130 in the near term and remain there, is, in our opinion, doomed to retreat.
We see little in the way of hope for silver, either.
This is the iShares Silver Trust (NYSE:SLV) weekly chart for the same four year period, and it shows a classic, long-term declining triangle, a bearish formation, to say the least –
Here, again, resistance is formidable.
We’d have to see a move to $15, at least – or better $16 – in order to hold out hope for an extended bull move in the price of silver.
The initiative was launched back on April 17th in a letter called Not For All the Gold in Egypt, and it asked you to consider selling the GLD June 21st 122 CALL for $1.45 and buying the GLD June 21st 127 CALL for $0.43, for a total credit of $1.02. We then suggested you use the proceeds to purchase the GLD September 20th 116 PUT for $0.95. Total credit on the affair was $0.07.
We’re just a week away from expiry, and the latest push higher in GLD has put the June options in play.
And we don’t like that.
So we’re taking the following action.
In so doing, we buy some time and add another $0.18 to our initial credit.
The long September PUT, of course, remains open.
We’ll keep an eagle eye on this one.
Many happy returns,