February Gold is up $6.50 per ounce at $1118.00 this morning as I write.  The included chart shows that February Gold has managed to bounce about $20 since testing the $1100 area last weeks.  The directional movement indicators are still bearish and the ADX lines is still declining.  There is now evidence yet that the secular bull market has resumed in gold yet.  I still expect February Gold to test lower below the $1100 level before this correction is over.  That being said, we are in a longer term secular bull market and the bull move could resume at any time.  I just do not expect that to happen until after the end of the year.  For now, I am not ready to begin adding new bullish positions in the gold market yet, but I am interested in attempting to set prices out there to try to buy back some of our short April call option positions.  I will let those continue to work GTC.  I will update you on if and when those trades ever get filled.

 I recommend attempting to buy only one April Gold ($1300 strike) call option to liquidate at $7.50 GTC.

I recommend attempting to buy only one April Gold ($1400 strike) call option to liquidate at $4.00 GTC.

I recommend attempting to buy both April Gold ($1500 strike ) call options to liquidate at $1.00 each GTC.

 We are currently long three April gold calls and short six other strike priced April gold calls.  On the anticipation that a large bull move in gold is yet to come in the first quarter of 2010, my near term goal is to cover four of the six short April Gold call options for profits to make our remaining positions more potent on the upside.  Once gold begins to form a bottoming pattern, I will want to add to long gold positions as well.  Stay tuned.

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

(February Gold options expire in 36 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 94 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.