Strategic Update: Fool’s Gold (PREMIUM-UNLOCKED)

*The following Premium Post was issued to TLS members on March 3, 2021.*

The gold complex is sliding — where will it stop?

As you know, we are bulls on gold and gold miners in the longer-term. However, you also know that we believe the precious metals complex is in a intermediate-term consolidation since topping last summer and that the next up-leg won’t commence until this consolidation is finished. In the near-term, you also know that we sold our gold miners positions (GDX, GDXJ) a month ago after breaking support and we sold our gold position (GLD) after breaking support near the ~172 level. You should also know that we added a short, or inverse, position (JDST) on the junior gold miners last Friday and Monday. So what is the plan?

In our view, the recent break of ~165 in the GLD opened further near-term downside to much more significant support near ~158.50. There is a good chance that it is headed there. There is also a good chance that the gold miners continue to slide until that point. We are, thus, watching that level in order to buy some GLD and cover some JDST. Because such a test may occur rapidly, i.e., a fast market, we have entered the following limit orders to:

  • Buy GLD at 158.60
  • Sell 1/4 of our JDST gold miners hedge at 13.00

We will of course continue to monitor this action. The gold miners slide may well push JDST higher than 13.

That’s all for now. As always, stay tuned to our DSS posts for further developments — they provide the most current updates to our investment portfolio and outlook. We touched on many of these potential moves in today’s DSS.


Disclaimer: JLFMI’s actual investment decisions are based on our proprietary models. The conclusions based on the study in this letter may or may not be consistent with JLFMI’s actual investment posture at any given time. Additionally, the commentary provided here is for informational purposes only and should not be taken as a recommendation to invest in any specific securities or according to any specific methodologies. Proper due diligence should be performed before investing in any investment vehicle. There is a risk of loss involved in all investments.