Gold is up strong this morning as the yellow metal is higher by $27 and now stands at $870/ ounce. I’ve been talking about the correlation between gold and a weak dollar and the gold trades outlined on Monday have been low risk/ high reward. I have been expecting a continuation of the sell-off in the dollar and today’s move in gold could put it on a track to $900 by the end of the week.
This week’s “triple witching” options expiration on Friday could have a big effect in both gold and silver. If gold continues higher it will fuel the buying in the shares of gold producers. Barrick Gold, Goldcorp, Gold Fields and Newmont Mining all are moving higher today.
Barrick Gold (ABX, $36.90, up $1.99)
The December 35 calls (ABXLG, $2.15, up $1.00) were going for 80 cents. Set stops at $1.60 and remember they expire this Friday. The January 35 calls (ABXAG, $4.10, up $0.90) were profiled at $2.70. Set stops at $3.75.
Goldcorp (GG, $32.65, up $1.00)
The stock is up $2 in two days and the December 30 calls (GGLF, $3.00, up $0.85) are now deep in-the-money. They haven’t quite hit a double from an entry price of $1.65 but set stops at $2.90. The January 30 calls (GGAF, $4.60, up $0.60) were at $3.50 and are up 30%. Set stops at $4.25.
Gold Fields (GFI, $9.78, down $0.30)
The December 10 calls (GFILB, $0.20, down $0.30) were profiled at 50 cents. They hit a high of 70 cents when the stock hit $10.10 but are quickly fading. The January 10 calls (GFIAB, $1.20, down $0.10) closed yesterday at entry prices but are down 8%. Gold Fields has always lagged the “Big Three” and really, probably, should’ve never made this list.
Newmont Mining (NEM, $41.59, up $1.49)
The December 40 calls (NEMLH, $2.00, up $0.70) were trading for $1 and you could close positions now for a 100% return. We will keep the January 40 calls (NEMAH, $4.30, up $0.70) open which were profiled at $2.85 and are showing a gain of over 50%. Set stops at $3.90.
It looks like NovaGold Resources (NG, $2.87, up $1.15) is going to get the $20 million it needs to survive. The stock was trading at $1.30 and I had mentioned the heavy volume it was experiencing as the bears were circling the wagons. Three weeks ago the stock dropped 80%, from $1.70 to 58 cents, when the company announced that it might not be able to repay the loan. Don’t get caught up in the hype.