Gold survived today's options expiration relatively unscathed. Gold dropped right down to the top of the triangle on day 13. This pushed the 3 day RSI oversold which probably makes this our half cycle low. I would say that gold should again challenge 1800 over the remainder of this cycle which is 100 points away.
If you bought gold now, I would be putting you into the August contract which is presently trading 25 points higher than the June which expires Friday. This means a move to 1800 would be worth 75 points with each point being worth $100, so the profit potential here is $7500. If you place the stop at 1700 you are risking $2500. This gives the trade a 3X1 reward to risk ratio. Don't forget that there are also micro mini futures contracts for gold that are 1/10 the size.
I still believe gold's under appreciated cousins Silver and Platinum will outshine gold this next daily cycle. Silver in particular tends to perform better than gold late in the intermediate cycle. I already have July Silver and Platinum positions but may add here.
Because we would be buying into a chop instead of a swing low, I am aiming for the bottom of that trading range. I am buying SI at the 10 day moving average of 17.25 and the 10 day moving average for PL at 855.
Silver is worth $50 per penny. I think a silver will reach $18.50 to $1875 before this cycle tops. If you can buy silver at $17.25, you have the potential for a 125 cent gain. Each penny on silver is worth $50. This trade has the potential to gain $6250 and maybe more. We would keep the stop at $17, so you are risking 25 cents or $1250. That would be a 5 to 1 reward to risk ratio. The margin for a silver contract is $9900 but there is a micro silver contract that is 20% the size and margin.
I think Platinum can reach 1000 by the end of this cycle. If you are able to get a PL fill at 855, you could capture a 145 point move. Each point for a PL contract is worth $50, so a PL contract has potential for a $7250 gain. The stop would be set at 840, so you would be risking 15 points, or $750. This would give the trade a 9.5 to 1 reward to risk ratio. That seems kind of out there but the numbers are the numbers.
The margin on a PL contract is $4950 which is much lower than gold and silver. You could buy two PL for the same margin as a silver and probably make twice as much on the trade. For this reason, I am leaning very hard towards the platinum. You never really know what is going to happen cycle to cycle so I like owning some of each. I would tend to favor PL the most for the remainder of this cycle, followed by Silver then gold.
Remember, this is buying Aujgust Gold at 1725, July Silver at 17.25 and July Platinum at 855.
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