February Gold is up $6.80 per ounce at $1133.00 this morning as I write.  The included chart shows that gold is bouncing a bit from its recent selloff.  I am not surprised to see gold bounce in here following the sharp drop of the past week.  Many times, these gigantic corrections form a two legged fall, or what Elliot wave theorists call A-B-C corrections.  The “A” is the first sharp drop, followed by a bounce “B”, the finally followed by a large down leg “C”.  I suspect that we are in the “B” leg right now and the sharp down “C” leg is still to come.  If I am right about this, then gold will probably fall down towards the $1040 to $1070 area before this correction is over, and the next bull leg can begin.  For this reason, I recommend attempting to liquidate our February ($1140/$1180 strike) vertical call spread for $13.50 credit today.  We originally bought that spread for $7.00.  Otherwise, hold the rest of our positions.

 Long 2 February Gold ($960 strike) put options at $10.40 each.

Long 2 February Gold ($970 strike) put options at $10.60 each.                 

Long 1 February Gold ($1140 strike) call option at $23.90.

Short 1 February Gold ($1180 strike) call option at $16.90.

Long 1 February gold ($1270 strike) call option at an average cost basis of $5.00 per ounce.

(February Gold options expire in 46 days).

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Long 1 April Gold ($1210 strike) call option at $33.00.

Short 2 April Gold ($1300 strike) call option at $17.50 each.

Long 1 April Gold ($1275 strike) call option at $17.80 per ounce.                 

Short 2 April Gold ($1400 strike) call options at $9.90 per ounce each

Long 1 April Gold ($1375 strike) call option at $11.80.

Short 2 April Gold ($1500 strike) call option at $6.90 each.

(April Gold options expire in 104 days).

 David Hall

 The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options can be substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.

 This newsletter is not intended for dissemination to the public without prior approval from David Hall.