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GDX – Gold Miners ETF (Last:28.15)


On February 2, based on reports from subscribers, I established a tracking position of 400 shares @ 28.39. I am still suggesting that you exit half at 29.42, but we’ll keep the remainder for a shot at much higher prices (see chart inset). If GDX eventually reaches the 36.66 target, we could book a profit of as much as $1,886. It could take a while, but we’ve already proven we can endure a brutal grind waiting to collect our first payoff. It is not yet in the bag, though, since the stock was still 27 cents shy of the 29.42 profit target at today’s high. Fortunately, the uptrend looks sufficiently robust to get us there on Wednesday.

This trade is what I’ve described to you in the past as the kind of no-brainer opportunity Rick’s Picks tries to offer from time to time in order to make your annual subscription pay for itself, even if you rarely follow my touts, Trading Room instructions or ‘request session’ actionable ideas. GDX offered a relatively cheap play, and the trade could have been done on margin in an account with less than $12,000 (or $6,000 if you halved the size to 200 shares). The trade was deliberately chosen and precisely timed to address subscribers’ keen interest in gold and to ameliorate their recurring frustration trying to make money in a precious metals sector that has been become notorious for misbehavior. The actual buy recommendation was simple and straightforward, allowing subscribers to buy the stock pennies off the bottom of a hellish dive. We subsequently came close to getting stopped out on a relapse, and although our grueling ‘hold’ caused me to lose patience at one point, I stuck to my discipline and let the trade run. I hope you learned something valuable about risk management in the process. The trade was about as good as it gets at Rick’s Picks, and if you have not profited on it, you surely should have. Why not?  Only you can answer that question, but it may be helpful to try, lest you miss out on the next no-brainer opportunity that I provide. _______ UPDATE (Feb 19, 7:46 a.m. EST): GDX has traded as high as 29.66 overnight, so 200 shares @ 29.42 have been sold from the tracking position. The remaining half of the position will have an effective cost basis of 27.36. For now do nothing further. _______ UPDATE (Feb 20, 6:20 p.m.): Let’s try to take some more money off the table, offering a round lot (or 25% of the original position) at 30.40. That’s a dime beneath the imposing, 30.50 target shown in this chart. _______ UPDATE (Feb 23, 9:40 p.m.): With Friday’s sale at 30.40, profit-taking has reduced the cost basis of the 25% of the position we still hold to 24.32We may consider spreading off the risk via covered writes at some point, but for now do nothing. _______ UPDATE (Feb 27, 9:12 p.m.): A relative novice posted an rABC pattern in the Trading Room that is unlike any I’ve used.  Even so, its 26.86 target is technically legitimate, however unorthodox, so we’ll use it. Our position will still show a profit, but there’s no question that the adversity we’ve endured has been painful, even for a gold vehicle. I plan to stick with it no matter what, and so here’s a post from ‘Ronbl’ in the Coffee House if you need some encouragement: “Miners are going to have good earnings. Even if this is suspected to be coronavirus-related, the Fed is going to have to lower rates, supporting higher gold prices. At some point the market will have to value the miners upwards.”

Please do not ask trading questions!

  • Jon February 24, 2020, 1:44 pm

    Great call on the metals Rick!
    Looks like today is developing into a clear reversal signal in the form of a hanging man candle in both GDXJ and GDX. Sold for very nice profit at the top of the day….might go higher after a bit of a correction, but I am happy with the gains so far….lets see what happens next.

  • len daquino February 21, 2020, 8:37 am

    yeah .. great little trick by the fed and the desperate gang to keep their bs together in the market .. dalio smell all over it . patriot buy

  • Marty February 18, 2020, 10:55 pm

    Great timing on the GDX Rick, missed your bottom call by 4 cents, so we’re whistling Dixie so far.

    Thanks for noticing, Marty.