Well.. so much for picking a bottom

Clearly I was wrong and now i'm stuck.. 6 weeks down on the HUI, I can't really sell after a selloff like that. 1 week early (at least) and i'm paying for it.

This is the 3rd 20%+ selloff we've had in the miners since September. In September it was 25%.. In November/Dec it was 23%.. Now we've broken through 20% again.

I guess now I just have to sit and suffer through the BS. Hopefully this is cleaned up by Tuesday and we can start to rally again...

I've started to buy miners about 2 weeks ago. My worst (and first) pick was NEM (down 12.5% from where I bought) I bought some more SLW two days ago plus GG and SNDXF.PK (Sandstorm gold) today. I think we`re very close to a bottom. Fundamentally these stocks are so damn undervalued that you can't make something wrong in the longer run. The only thing which could really make things worse is a massive crash in pm prices and there's a very low probability for that. I'm not using any leverage, so let the markets settle and then we're up for some huge fireworks to the upside.

If you insist on playing the stock game, why not buy put options on the stocks you buy. It would soften the blow if the stocks plummet and let you buy back in at the lower price. $.02

Gold will fall again by the looks of it. The HUI is struggling which is very bearish.

On another forum, a poster was nice enough to post this..

below is the closing price of the week before the downdraft and the closing price @ the end of the downdraft and then the subsequent "rally"

05 - 24/12/1998 Length 7 Weeks
88.63 - 66.17 and 4 wks later @ 76.77

06 - 17/09/1999 Length 5 Weeks
74.48 - 65.15 and 3 wks later @ 90.74

07 - 05/11/1999 Length 5 Weeks
90.87 - 75.03 and 3 wks later @ 80.96

08 - 21/07/2000 Length 5 Weeks
61.25 - 49.51 and 7 wks later @ 52.45

09 - 17/11/2000 Length 5 Weeks
42.63 - 36.01 and 3 wks later @ 45.34

10 - 18/10/2002 Length 5 Weeks
135.45 - 107.96 and 8 wks later @ 139.69

11 - 07/05/2004 Length 5 Weeks
236.50 - 168.80 and 3 wks later @ 199.93

12 - 15/08/2008 Length 5 Weeks
454.30 - 315.50 and 6 wks later @ 329.18
and 4 wks later @ 168.85 which was the big debacle of 2008

Click to expand...

benjamen said:

If you insist on playing the stock game, why not buy put options on the stocks you buy. It would soften the blow if the stocks plummet and let you buy back in at the lower price. $.02

Click to expand...

I do hedging. In fact, I hedged so well that I'm actually up 11% still on the year while the HUI is down over 11%. I just fucked up the last 2 days but at least I was able to get AUY off yesterday so I saved a few basis points there. I've been in the right names for the most part (BTO.TO and CGG.TO) so that certainly helped. But I've also had some dogs like THM and JAG which are getting to be much smaller in my portfolio in the wrong way.

As for buying protection now with options... I think it's probably too expensive at this point. The next bounce should be violent and I think we've already seen 20% of a scenario we see 25% max. I am expecting another gap lower tomorrow and this BS to end on Tuesday. 43-46 on the gdx is likely the bottom "zone".. Originally I thought it would be 46-48.. As I've said before in other threads, I love shorting GDX because I think they pick shitty names.

It actually pisses me off quite a bit because originally I had this cycle bottom pegged around 4/4 (which is my sons' b-day) but I re-entered early because I thought I saw a bottom and didn't want to screw up by trying to be perfect.


The whole point of my comment was to point out I was wrong for calling the lows in. I still think we are in a "zone" where we should bottom but clearly the "coast isn't clear" quite yet.

I last bought physical gold when it was some $60 higher than now.

So what. They bring it down more, I can buy extra fractional (1/10th oz Eagles) when I buy the full one ounce coins.

ZH-er "Acidtest Dummy" posted an interesting notion there at ZH one day, namely that Gold gets Carbon (both in fuel and human formulas) to gather itself into ever larger piles... I thanked him for his observation, but told him that MY pile would never get absorbed into someone else's larger one... I'll just keep building mine as income permits.

benjamen said:

If you insist on playing the stock game, why not buy put options on the stocks you buy. It would soften the blow if the stocks plummet and let you buy back in at the lower price. $.02

Click to expand...

I use gold/silver volatiliy calls as a hedge. These are similar products like the gold volatility futures offered by the CME: http://www.cmegroup.com/trading/metals/precious/gold-volatility-index-vix-futures.html
I buy them over the counter from my bank.

Won't the Fed kill the price of gold to keep it from causing the dollar a problem.

Looks like our pretty inverse head-shoulders is getting bent, if not broken. There's hope if we stop the slide here, though. Sitting with some paper gold fairly deep in the red (and some other 85% in the green, from the deeper past), but with a lot of dry powder too....watching and waiting.

svfox said:

Won't the Fed kill the price of gold to keep it from causing the dollar a problem.

Click to expand...

There are a lot of people who think they are and have been doing so for a long time now.

derek, re: op...

Jim Sinclair said:

...
The chart below suggests that either we’re on the cusp of another Lehman style event or panic selling has thoroughly engulfed the gold miners. Cycles point to 2015 as the next crisis, so probabilities favor the later. The invisible hand, just like 2008, accumulates weakness while public distributes it.
...

Click to expand...

http://www.jsmineset.com/2012/04/04/jims-mailbox-901/

Miners are up ~ 1% pre-market. :wave:

DCFusor said:

Looks like our pretty inverse head-shoulders is getting bent, if not broken. There's hope if we stop the slide here, though. Sitting with some paper gold fairly deep in the red (and some other 85% in the green, from the deeper past), but with a lot of dry powder too....watching and waiting.

Click to expand...

Now we're on track again

Who would have thought this smiley would become the thought leader?

I mean, when I started in this game, the rule was decisiveness, not just watching. Now some of that I'm sure is the hubris of a beginner in times when you did well using a dartboard to select trades, and now with more wisdom and a different market, it's, well, different. But to be reduced to just watching feels pretty weird for this run and gun cowboy trader.

Maybe it's just fatigue on my part. I used to really enjoy markets where you could go both short and long the same thing at the same time, and count on closing both trades inside 2 weeks, both green. Now it's just tiring.