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 Rick's Picks
Playing Gold By-the-Numbers
Rick Ackerman
Monday Jun 12, 2006
Excerpt from
Rick's Picks (website).
You can subscribe here.
We have a bid in for August
Gold, our first attempt to buy the stuff in nearly a month as
we've waited for the correction to run its course. The bid is
based on my minimum downside target for the Comex contract, 599.40,
a hidden pivot first broached here a couple of weeks ago. A subscriber
wondered in an e-mail message to me yesterday whether he should
be picking up GLD as a proxy, since it has effectively hit the
target, registering a low of 59.71 on Friday. While the
ETF and commodity gold move closely in tandem, for purposes of
buying one or the other it is easier and less risky to calculate
separate pivots for each than to interpolate one relative to
the other.
(Click on chart to enlarge)
I've done so in Monday
morning's "Touts" for the benefit of subscribers
who want to try bottom-fishing in GLD. I am sufficiently confident
in this target that I am recommending that you buy there aggressively,
albeit with the extremely tight stop-loss I have recommended.
The trade I advised earlier in the August futures can stand as
is. We also hold positions in several gold stocks that have weathered
the metal's correction nicely. We will continue to hold those
positions until an opportunity arises to take partial profits,
further reducing our cost basis as we have been doing all along.
***
A Subscriber's Wisdom
The other day,
I heard from an investor who has $200,000 to speculate with.
He asked whether it might be a good time to make an unhedged
bet either against stocks or for gold. I suggested doing both,
via a strangle that would leave him short "the market"
and long gold and/or mining shares. My reasoning was not rocket
science. As Rick's
Picks readers will already know, I think Gold's next
leg up will take it above $1,000. As for the stock market, it
is floating on hot gas, vulnerable at any moment to a devastating
decline that will be un-defensible (and untradable) once it has
begun. Meanwhile, I must concede that I am mystified by the resilience,
so far, of consumer spending in the face of a real estate bust
growing statistically more compelling each day. As far as I'm
concerned, it is only a question of when, not whether, the consumer
economy dives, taking the stock market with it.
Regarding my advice to the $200,000 bettor, another subscriber,
Julie Hotard, has weighed in with a somewhat more measured approached
than what I'd suggested. Here it is, in her words:
"Pat P's question is an interesting one. I have been staying
away from trading recently because I have been busy selling my
house in Seattle and moving to an apartment. If I were Pat P,
I would do pretty much as you suggested. Except that I
would follow Richard Russell's rule, 'Thou shalt not blow thy
whole wad.'
Save Some Ammo
"So I would maybe put 50K to work as you suggested,
and not touch the next 50K for a month, and then wait another
month before touching the next 50K-- just in case the Powers
that Be decide that your Free Commentary is one of the most popular
ones on the web and decide to make sure your advice comes out
wrong. [I comfort myself with the notion that The Furies prefer
targets who take hubris to an unseemly pitch. Remember Joe Granville
being carried into the lecture hall in a coffin? RA]
"I'd also be long more bullion than gold stocks, just in
case the PTB decide to try anything funny with the gold stocks.
And I'd wait to invest the last of the cash, just in case gold
stocks go on sale down the road somewhere. Nothing more
frustrating than seeing your fave security go on sale when you
have no spare cash to take advantage of the fire sale prices.
The Curve Ball
"You already know, but many of your readers have not
yet learned, that it is a good thing to practice patience and
waiting, in the markets. Because just when you think you've
got it figured out perfectly, they can throw you a curve ball,
as you alluded to in your discussion of the film The Hustler.
I sometimes wonder if some of your readers think that an
expert technician like yourself can predict with 100% accuracy
every time.
"At any time, there are always new inexperienced people
entering the markets, maybe with money they inherited recently,
or made by getting a lucky break at work by closing a huge sale
or something. You are right. They should all watch
The Hustler before they commit a cent to the markets.
"Am enjoying reading your excellent commentary during my
breaks from unpacking boxes."
Thanks for your words of wisdom, Julie, and for your kind
praise.
***
Learn My Secrets
Would you like to be able to forecast trends and price reversals
as accurately and confidently as Rick's Picks? Have you
tried other trading systems, only to find them too complicated
or otherwise unhelpful? Then don't miss my Hidden Pivot Seminar
this autumn in New York City. Plans are firming for a weekend
session in early October, so please let
me know via e-mail if you think you might attend. This
will be a no-frills version of the course that I gave in Denver,
offered at a significant saving over the original price.
There will probably be just one more session offered after that
on the West Coast, but that would be the last for a long while.
The course includes post-grad mentoring via a chat group that
some of my former students have set up. If you've been impressed
with the accuracy of my forecasts, this is an opportunity you
cannot afford to pass up. Let me hear from you soon, since seat
space is limited.
***
Rick Ackerman
email: publisher1@rickackerman.com
Information
and commentary contained herein comes from sources believed to
be reliable, but this cannot be guaranteed. Past performance
should not be construed as an indicator of future results, so
let the buyer beware. Rick's Picks does not provide
investment advice to individuals, nor act as an investment advisor,
nor individually advocate the purchase or sale of any security
or investment. From time to time, its editor may hold positions
in issues referred to in this service, and he may alter or augment
them at any time. Investments recommended herein should be made
only after consulting with your investment advisor, and only
after reviewing the prospectus or financial statements of the
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for marketing purposes. All names will be kept anonymous and
only subscribers' initials will be used unless express written
permission has been granted to the contrary. All Contents ©2005-2006,
Rick Ackerman. All Rights Reserved. You can subscribe here.
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