Skepticism continues to be our most potent defense these days against losing our shirts in the precious metals sector. That, and more than the usual amount of caution, since Gold’s worst correction in many a year shows no sign of ending. How else to trade an asset class that in mere weeks could be down a further 15 percent -- or up 25 percent, for that matter?

(Click on chart to enlarge)

Using the December Comex contract, we earlier identified downside risk over the near-term to as low as $513, an important Hidden Pivot support. But suppose we are flat-out wrong and bullion is about to complete a double-bottom launching pad near $546, equal to an important low recorded last June, or perhaps even more imminently near another support at $576?  Is it possible to be prepared for either scenario – fly or die – and to profit no matter which pans out? The answer is a qualified yes, but only if we go about it with as much discipline and caution as we can bring to the game.

Bottom-less

Yesterday, for instance, some chat-room denizens went bottom-fishing in Newmont Mining, using a worst-case downside target of  41.17 that had been highlighted in the Current Touts section of Rick’s Picks.  The stock would have needed to fall by at least $2.02 yesterday to bring NEM down to our level. As it happened, Newmont plummeted from the opening bell, eventually falling almost precisely to the pivot.  There, the stock noodled around for a while -- about half an hour -- before the floor gave way, sending it still lower, to an intraday bottom at 40.86.

Judging from the play-by-play discussion in the chat room that accompanied Newmont’s dive, traders who used the 41.17 pivot as a place to nibble didn’t stick around for long when it failed. One guy was out of his trade just a dime lower. Gun-shy? You betcha. But that’s the only way to trade right now if you are trying to bargain-hunt in mining stocks while waiting for a durable bottom to form.

Costly Errors Unnecessary

And what’s to lose if, in being “overly” cautious, we miss the first leg of Gold’s eagerly anticipated turnaround?  To the Hidden Pivot trader who is looking for the very first opportunity to pounce – the kind of opportunity that shows up on the one-minute bar chart before most traders even realize a bullish turn has occurred -- that first leg could be as subtle as 36 cents. That’s the kind of impulse leg we like when we are searching for a way in but are unwilling to pay more than chump change if we are wrong.

Remorse, self-deprecation, hubris, pain and even silliness have their moments each day in the Rick’s Picks chat room. But fear?  Not even the faintest whiff. It doesn’t have to be a guessing game, you know.  

***

Free Hidden Pivot Calculator

The Hidden Pivot seminar in New York City is sold out, but there are still some seats left at the three others that are planned: Vancouver (October 28-29); San Francisco (November 11-12); and Sydney, Australia (December 2-3).  You can  request a registration form and further details by clicking here.  And, if you act now, there is still a chance to claim a free Hidden-Pivot calculator and one of our snazzy Rick’s Picks combed-cotton polo shirts in your choice of colors.