February Gold is up $8.30 per ounce this morning at $1131.30 as I write.  The included chart shows that gold is still involved in a steep correction off its historical highs.  The directional movement indicators are bearish and the ADX line is still declining suggesting to me that the correction is not over for gold yet.  Over the past several days, February Gold has found support right along the brown 40 day exponential moving average in the $1115 to $1120 area.  The commentary from the Fed following their yearend meeting, later today could move this market in the short run.  For now, we will keep our current 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 ($1270 strike) call option at an average cost basis of $5.00 per ounce.

(February Gold options expire in 41 days).

__________________________________________________________________________________________________________

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 99 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.

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February Gold is down $6.80 per ounce at $1117.00 this morning as I write.  The included chart shows that February Gold continues to correct the major bull move.  Notice how the highs of the recent days mirror the declining red 5 day exponential moving average.  In a strong move, this is what happens; prices ratchet right along with the 5 day average.  I still believe that gold will fall below $1100 before this correction in prices is over.  The directional movement indicators are bearish and the ADX line continues to fall.  The long term secular trend of gold is still bullish.  Over the next few weeks, I will be looking to cover some of the short call portions of our April ratio call spreads.  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 42 days).

__________________________________________________________________________________________________________

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 100 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.

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February Gold is up $1.20 per ounce at $1121.10 this morning as I write.  The included chart shows that gold is still in a downward correction of the longer term bull market.  Today’s bounce is unimpressive so far struggling to rally back to the downward sloping 5 day moving average.  The directional movement indicators are bearish but the ADX line is still dropping.  I still expect gold prices to drop below $1100 soon before eventually bottoming and rallying to new highs.  On Friday we were able to liquidate our February $1140/$1180 vertical call spread for $1350 gross.  We originally entered that trade for a cost of $700 gross so our gross profit was $650.  For now I recommend holding our remaining positions as is.

 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 43 days).

__________________________________________________________________________________________________________

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 101 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.

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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).

__________________________________________________________________________________________________________

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.

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February Gold is up $9.00 per ounce at $1129.90 this morning as I write.  The included chart shows that gold is still involved a major downward correction.  In a secular uptrend, downward corrections can be severe, especially coming off quick $200 per ounce rallies.  As long as the secular bull market is in place, would be bears have to be careful because the bull market could re-invigorate itself at any time.  The best thing to do is to lay low for awhile and wait for the correction to run its course and then be prepared to add to bullish long term positions.  In our case, we also want to cover some April short call positions too.  Given the size of the recent rally and sudden selloff, I wouldn’t be surprised to see gold trade back and forth eventually to a lower level below the $1100 area before the correction is over.  In the mean time, the longer gold meanders around in its correction and possibly trades lower, our short April gold call options will continue to lose value making it better for us to cover those positions.  The price isn’t right just yet to accomplish that task.  The directional movement indicators are bearish and the ADX line is still falling rapidly.

 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 47 days).

__________________________________________________________________________________________________________

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 105 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.

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February Gold is up $1.80 at $1145.20 this morning as I write.  The included chart shows that gold is still in a long term secular bull market.  Let’s not forget that.  Near term, gold is having a much needed correction off the highs following a $200 per ounce rally over the past month.  Gold prices are approaching the 40 day exponential moving average and a 50% correction of the $200 move.  My suspicion giving the speed of the latest rally and the ensuing fallout, that gold prices have probably seen their highs for 2009, and that prices will continue to correct and consolidate until the end of the year.  But, don’t forget that the long term trend is up and it could reinvigorate itself at any time.  The directional movement indicator has crossed to the bear side and the ADX line continues to fall from the overbought levels mentioned over a week ago.  On more price selloff’s and more time erosion, I will eventually be recommending to buy back some of the short call options we have written on the April gold.  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 ($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 48 days).

__________________________________________________________________________________________________________

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 106 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.

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February Gold is down $14.70 per ounce at $1149.30 this morning as I write.  The included chart shows that February Gold is still involved in a major bull market that is in a much needed correction at this time.  Over the past month, gold has rallied almost exactly $200 per ounce, or a 19% increase, so it should be no surprise to anyone that gold is having a sharp correction now.  I have mentioned repeatedly over the past couple of weeks in these same newsletters that you shouldn’t be surprised to see $50 to $100 daily price swings soon.  Now that we are having them, I am getting a lot of nervous calls.  Again, as I have said before, the reason why I have positioned our gold trades with options only and NOT futures contracts, was for this exact reason.  And guess what, this is just the tip of the iceberg if I am right about where this gold trend is eventually going to go on the upside.  There will come a time when we will see $100 to $200 days both up and down over the next few years before this secular bull market is finished.  For now, we are in a much needed correction.  In a strong bull market, there is no telling how long or how far this correction will go.  I would recommend, NOT to try to play the correction because the bull could return at any time.  My expectation is that this correction in gold may last for a couple more weeks of back and forth trade, and may fall back towards the area where India made its purchase in the $1045 per ounce area.  The key for our April ratio call spreads is for time to elapse and prices to fall in the near term to a point where we have a good profit on the short calls that we can buy back, thus leaving us with outright calls out to the April expiration.  In the mean time, those of you who have followed my advice also have some February put options outright at a cost basis of zero.  So, just in case I am completely wrong about the gold market and there is a price crash, we have the ability to profit from that event.  If gold prices crashed, then our ratio call spreads would make money as well as we would end up keeping the credits paid to us up front.  Stay tuned and be patient for the next few weeks as we attempt to cover some of the short call options later.  Hopefully we will get the opportunity.

 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 49 days).

__________________________________________________________________________________________________________

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 107 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.

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February Gold is down $27.50 per ounce at $1142.10 this morning following Friday’s sharp price drop coinciding with the release of the employment report.  The included chart shows the sharp drop in gold which has been expected.  In the days to come I will be looking for places buy back some of our short April call options, and possibly look to put on some new vertical call spreads.  The long term trend of gold is still up.  Gold could correct back a long way here and still be bullish.  The directional movement indicators are still bullish, but just barely now.  The ADX line is still dropping from its overbought highs.  Here are some targets for where this price correction in February Gold may fall.  The 40 day moving average is in the $1117.00 area.  Also, if you look at the price where India bought their 200 tonnes of gold, in the $1040.00 area, which is also a big support area, and compare that to the highs at about @1227.00, you could calculate the Fibonacci correction levels.  The three Fibonacci correction levels are at about the 38%, 50% and 62% correction levels.  Those prices in order in the February contract are, in order, $1151.00, $1127.00, and about $1104.  If gold prices continue to sag down in those levels, I will be looking to buy back some short calls options and/or buy some more vertical call spreads in the April contract, and possibly June.  We shall see.  This is a time to be both patient and aggressive.  Be patient to wait for the best buying opportunity, and be aggressive in taking action when the time arrives.

 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 50 days).

__________________________________________________________________________________________________________

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 108 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.

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As I have mentioned several times in recent newsletters, in which I said to not be surprised that we will begin seeing $50 and $100 trading days in gold soon.  Well, it is happening today!  The included chart shows how gold has fallen near $70 per ounce today after the surprise unemployment number was released.  This is precisely why I have been advocating option strategies and NOT futures contracts.  I have seen this before, especially in the early 1980’s at the beginning of my career.  I will also state that I think that this is just the beginning.  Fully expect to see much higher prices in gold after this correction concludes.  Then you better get ready for $50+ up days that go along with the $50+ down days.  As prices go higher, the volatility will go higher as well.  I will get to the point where I will only recommend vertical spreads rather than ratio spreads to keep the risk down.  Ratio spreads will only be recommended in this scenario if the difference between the strike prices is very wide.  I you have been doing exactly as I have recommended on gold, then today is not a big deal for your positions.  As a matter of fact, don’t forget that we now own some February put options basically for free, from the liquidation of the short puts recently.  So, if gold continues to crash, we stand to profit from our outright puts.  This action is just what the doctor ordered for our ratio call spreads since gold was rallying too fast too soon.  This correction should help alleviate that problem, as time goes by at these lower price levels.  I will be looking to cover some or our short April Gold call options at a profit on this selloff.  That way, when the next big rally begins, we will have outright call options in which to participate rather than having higher strike short calls to get in the way.  I fully expect gold to correct some more now, and then, very soon, begin seeing prices rebound once again.  I still believe that gold will reach at least $1330 to $1350 buy some time in the first quarter of 2010, and then higher later.  Stay tuned.

 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.

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February Gold is down $11.60 per ounce this morning at $1206.70 as I write just prior to the release of the monthly jobs report.  The included chart shows that the overall trend for gold is strongly upward.  Gold is now in some sort of small correction so far, but has only been able to pull back to the 5 day exponential moving average.  As a matter a fact you should notice that this latest sharp up move in gold has been riding right on top of the 5 day moving average the whole time.  Gold prices haven’t been able to close below the 5 day average since early November in the $1050 area right after it was announced that India bought 200 tonnes of gold from the IMF.  The directional movement indicators are bullish but narrowing slightly and the ADX line is high but meandering sideways for now.  ***The unemployment numbers just came out and showed that unemployment dropped back to 10% even, better than expected.  This should be bullish for stocks in the short run.  Gold prices have not moved at all so far on the news.

 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 53 days).

__________________________________________________________________________________________________________

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 111 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.

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