Thursday, May 16, 2013

GOLD MINERS WILL REBOUND (sooner or later)

June 19, 2013
Well, here I am again, adding my 4rth purchase to this position. This time, I am going to make a double buy. NGUT closed today at $8.04 and is down to $7.96 in after hours. So a double buy here at $8 brings my average to $10.59. I started buying NUGT back on April 13 when it was $16.59. I fully expect that NUGT will rebound at some point, $20 would be nice.

May 16, 2013 post
I last posted about this on April 20th (see below) when I made my second purchase of NUGT to bring my average cost to $13.8. Today, May 15, I made my 3rd purchase and added to the position at $9.31. My average cost is now $12.31. The 5 year chart for gold is ugly ugly (see below). Looks like gold is headed toward $1200 (maybe). But I will keep cost averaging on NUGT. At some point gold and the miners will rebound. That's my take on it. I think it is hilarious that the gold bears are saying that gold is essentially a symbolic hedge against a weak dollar or a falling market. (are you telling us its worthless?) So smart these guys are-except  there is thousands of years of historical data that says they are wrong. I am betting that thousands of years of history will prove to be right. 

April 20, 2013 post:
I was just thinking about this post below from a week ago and wanted to add an update; on Friday, I bought the same dollar amount as my first purchase on April 13. My average cost per share now is $13.81. The current price is $11.05. I am steadfast in my belief that cost averaging down on NUGT will make you a substantial amount of money, when this thing turns upward. $40 price target. 

Gold Miners can't stay down forever

April 13 post:
Some thoughts from today:
If you want to make huge returns in the market, you need to possess a few things. Two of the those are the willingness to gamble and the ability to measure the risk/reward ratio.

Let us look at NUGT-3x ETF Bull for Gold Miners.

Down about 18% today, 10% yesterday and 5% the day before that.
67% year to date
and 75% year over year.

A little oversold? Definitely-But lets face it, it's also a little scary to think about buying shares of NUGT and risking your precious, hard earned dollars.
These shares could easily go down a little further.
But at the same time, this situation has opportunity written all over it.  When these 3x ETFSs  reverse, they come roaring back in a big way and can double in a couple of weeks.  The nearest resistance above its current price of $16.59 (after hours) is $40. 

This opportunity exists because of the fear of loss that is always omnipresent on Wall Street. You should embrace this fear and capitalize on it.  In a case like this-it is good to remember that you would not be buying an individual company with iffy fundamentals-you would be buying an entire industry (gold mining) that is in relatively good shape financially.  

This is a good time to mention that, as a rule, you shouldn't put more than 5% of your portfolio into any one position and that it's a damn good idea to scale in.

I used to say to myself-"screw that 5% rule". But, I have learned 2 things from following that rule-One is that it allows me to play around with at least 20 different investment ideas at one time and the other is that I'm not staying up at night worrying about any one particular stock that is going south on me.  Trading should be fun, not nerve wracking.

Now talk about fun, have you heard this little 8 year old girl play guitar?  Talk about a child prodigy!  Awesome stuff.