| jul 27 2007 | | XGD ishares | Here is another tip to have fun with.
XGD is a basket of gold companies that lessen your risk. You are not betting on one company.
XGD closed to day $69.83 down 71cents.
The play for this one is to buy anywhere below $70 and put a sell order in for $80 for a 14% increase within say three months. $2000 will make you $285 before costs.
Anything below $70 is incredibly cheap with a bottom in twice this year at $65.55. It has touched $80 at least ten times this year. So the downside risk is not great whereas the upside potential is really good. For the faint of heart I would suggest a stop close below the low. Personally if it went down like a roller-coaster I would put my arms in the air and scream like a girl. It will go back up.
Fundamentals for a rise in the POG and hence XGD are based on the collapse of the USD, geopolital risk and growing demand from emerging market countries. Considerable downside could be caused by Central Bank selling, serious stock market malaise or market manipulation.
This looks like fun.
jul 30 2007
The Source adds:
Well i did tell you XGD was cheap under $70. Those who heeded my words were rewarded with a $2.27 pop in the shares today. Now it would not suprise me to see another dip below $70 but a three and a quarter jump on the first day is not shabby. Let it run a bit further and then start putting stops on the way up. It will be a roller coaster ride so hang on. Will report again when some thing significant happens.
aug 10 2007
The Source adds:
Once more gold held up during a week of financial institutions tottering on the brink of bankruptcy, huge hundred point swings in the markets, the PPT intervening in the markets to prop up the system, hedge funds locking in their investors to prevent withdrawls, central banks flooding the markets with liquidity, all in, just a taste of what is yet to come. XGD meanwhile is still at a buy point, even though it was affected by desparate sellers unloading any liquid stock, including PM stocks, to cover their margin calls. gotta love these markets. watch this space.
aug 19 2007
The Source adds:
Now that's what I call a correction. Markets gyrating hundreds of points up and down. Talking heads saying it looks bad but the economy is strong. Skeletor Kudlow doing his happy clappy rountine about markets are good, democracy is good, America is good. Who is pulling his strings? What a muppet. XGD closed C$62.42, gold closed at $656.30
So what to do. Hold tight or buy more is my advise. The Fed paniced and cut the discount rate by 50 basis points and suddenly all the problems went away and the markets rebounded. Well guess what? All the fundamental problems are still there. Of course, as Cramer would say, the Fed are nuts. first you have a problem caused by the Fed creating too much liquidity, then when the markets try to adjust for this the Fed throws more liquidity at the market. Bit like pouring gasoline on a fire in order to extinguish it. What it will cause is more inflation, which is good for gold. The Dollar jumped two points on the index and if it goes higher it could force short positions to cover. This would cause gold and silver to drop temporarily. But believe me PM price are heading higher, soon and a lot.
As the Chinese investor said, "when I feel I should do something, I sit on my hands and wait."
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