February Gold is up $7.90 per ounce at $1220.90 this morning as I write.  The included chart shows that gold continues in its latest sharp rally.  Gold continues to trade just above the 5 day exponential moving average.  The directional movement indicators are still bullish and the ADX line is flattening from its rollover and may be beginning to turn up again.  You could argue that the gold market is very over bought at this time, but emotions seem to be taking over.  This type of trading can take prices in the short run to extreme elevated levels and then usually leads to very sharp price drops.    Last night, our order to buy back the 4 February Gold $935 put options was filled at $1.00 per ounce.  This resulted in a gain of $5.20 per ounce or $520 gross per option times four equals a total gross profit of $2080.00.  Remember that these short $935 put options were part of a ratio put spread involving the ownership of two $960 puts.  Those $960 puts originally cost us, coincidentally $2080.  So, in effect, the profit we just realized on the $935 puts paid for the $960 puts that we still own.  So we effectively own two February $960 puts for free.  Remember also that we already own two February $970 puts for free as well.  Therefore, if February Gold were to suddenly crash for some unforeseen reason between now and 54 days, we stand to profit on our put options if prices drop below the $970 area. 

 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 54 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 112 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 $10.30 per ounce at $1210.50 this morning as I write following yesterday’s $18.00 rally.  The included chart shows that the gold market is in a very strong bull market uptrend.  The chart also is beginning to suggest that a possible parabolic move is getting underway.  These kinds of moves happen when emotional trading begins to take over as investors are beginning to throw in the towel and get in at any cost, because they just don’t want to “miss the move”.  When markets have these moves, prices can move way further than anyone ever expects.  Let me just say this now; don’t be surprised to see a $200 to $400 per ounce move within a week or two, if this is really the beginning of an emotional phase of trading.  Keep in mind, also, that following these emotional moves, prices usually crash for a period of time as well.  For that possible reason, yesterday, I put out a special report on gold to buy 4 February Gold ($1500 strike) call options for around $2.00.  Most of my fills were right at $2.00 and some were filled a little higher in the $2.20 to $2.30 range.  What this trade does is, for $800 or so, we have just help to protect the ratio call spreads from a sudden spike in price of several hundred dollars per ounce between now and January 26^th, when the February options expire.  So, if you look at our overlapping April ratio call spreads, we have the following 1 * 2 ratio spreads; $1210/$1300; $1275/$1400; $1375/$1500.  It is kind of like a fabric that has an overlapping stitch.  The exposure on that position is the naked short calls at $1300, $1400, and $1500.  Now that we have bought 4 February $1500 calls, we have limited the maximum risk that those naked short calls present beyond the $1500 area and one extra call just in case prices spike well past $1500.  February options expire in 55 days and April options expire in $113 days, so the February options give us protection for about half the time left before April expires.  The key to the success of the ratio spreads is for time to go by so that there is little time value left in the options.  At that time, we want gold prices to be near one of our higher strike prices like $1300, $1400 or $1500.  Since it now appears that the price spike may be happening much earlier than expected, we put our protection on yesterday.  Here is another good thing to look at; we took in gross credits for the April ratio spreads of a total of $6.00 per ounce and yesterday we paid out a total of $8.00 per ounce, so if gold stops right here and stays down until expiration, then we lose $2.00 per ounce, or $200 gross on this operation.  Not a bad risk considering that there is anywhere from $9000 to $12,500 potential gain that could be made on this trade campaign.

If prices continue to rise, we still need to consider liquidating the ratio spreads if the upper strikes are threatened because we really don’t want to carry an extra naked short $1300 call much past $1300, or the extra naked short $1400 call much past $1400.  Don’t forget that followers of this letter also have the February $1140/$1180 vertical call spread and the outright February $1270 call option.

The key is to try to gauge the extent of this emotional rally.  These things can end at any point along the way.

 Yesterday, we also tried to put on an April Gold $1550/$1700 ratio call spread for a $1.00 credit but were unsuccessful.  We will not re-enter that trade at this time. 

 Don’t forget that we are still trying to buy back the four short February Gold ($935 strike) put options for $1.00 per ounce each.

_________________________________________________________________________________________________________

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

Short 4 February Gold ($935 strike) put options at $6.20 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 55 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 113 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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Take a look at the included weekly chart on gold.  As mentioned in my special report a few days ago, gold has a history of spiking sharply when all the ingredients come together and gets into a frenzy.  There is a risk of that happening now.  Given the size of the breakout, there is no reason why gold can’t go well past my target of $1350 in the next few months.  Because of the danger that could happen with our ration call spreads, I recommend buying 4 February Gold ($1500 strike) call options at around $2.00 per ounce each.  That would be a gross cost of $200 times four or $800.  Just in case gold does something like it did between November 1979 and late January 1980, we will have a lot of protection and have a chance to make some money as well.  As I mentioned in the other day’s report, gold doubled in price between November 1979 and late January 1980.  This time may be different, but spending $800 on this insurance will put us into a stronger position.

 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 $12.60 per ounce this morning at $1194.90 as I write on a weaker dollar.  February gold is testing near its contract highs made last week in the $1200 area.  The included chart of gold shows a very strong trend this is in overbought territory.  The problem with that is that strong bull markets can remain overbought for long periods of time.  The directional movement indicators are bullish but the ADX line is still rolling over just slightly.  It could be that last Friday’s hiccup in the market over the Dubai news could have just been a one off type of selloff.  We shall see how gold trades today near its contract highs.  If prices stall and reverse today, then the ADX may be telling us something about a potential correction that could be beginning.  If prices storm past $1200, then that would give us more evidence that last Friday’s price action was just a blip inside this raging bull market.  For today, I recommend buying one April Gold ($1550 strike) call option and sell 2 April Gold ($1700 strike) call options at a credit of $1.00, which is $100 gross credit.  I am continually trying to add on more coverage on up from my expected target as long as I can do the trades for credits.

 Don’t forget that we are still trying to buy back the four short February Gold ($935 strike) put options for $1.00 per ounce each.

_________________________________________________________________________________________________________

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

Short 4 February Gold ($935 strike) put options at $6.20 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 56 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 114 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 $11.30 per ounce this morning at $1177.30 after being down as much as $52 per ounce overnight on the news that Dubai wants to delay payments to 70 international banks for the next six months.  The amount involved supposed is about $60 billion dollars.  That means that almost all of the banks involved have less than $2 billion in exposure to Dubai.  In the big scheme of things, this is an insignificant amount.  We will see if there is more to this story other than one brother, Abu Dhabi trying to teach another brother a lesson, Dubai.  Abu Dhabi could easily pay off this debt for Dubai.  I believe that this is the reason why gold has come almost all the way back.

The included chart shows the strong rally in gold on Wednesday and on some electronic trade Thursday, and then it shows the sharp break last night into today on the Dubai news.  As the market gets a handle on what it thinks is the amount of money involved, we are seeing huge price recoveries from last night.  The major trend for gold is still up.  I am still looking for $1350 by sometime in the first quarter of next year based on the bullish inverted head and shoulders pattern that developed in gold over the past year.

On Wednesday, I chose to recommend liquidating for a profit the February $1100/$1130 call spread.  I also recommended liquidating the February $1175/$1225 ratio call spread because I didn’t want to risk a spike up to the upper strike price following Wednesday’s close.  I have seen charts like this before, and the gold chart is entering a phase where $50 and $100 spikes up AND down will become more common and when you have a close with momentum towards your upper strike price in a ratio call spread, you don’t wait around and risk the next day’s open if you want to last in this game for long.  So we took some loss on that portion of the gold trade.  We have many other positions that should take advantage of further gold rallies.

 Here were the results from Friday for some of my clients:

 We liquidated the February Gold ($1100 strike) call at $96.60 per ounce for a total gross gain of $6400 from our entry price of $32.60 per ounce.

We liquidated the February Gold ($1130 strike) call at $74.60 per ounce for a total gross loss of $5000 from our entry price of $24.60 per ounce.

 So the total gross gain on the February Gold $1100/$1130 call spread was $1400.

 We liquidated the February Gold ($1175 strike) call option at $51.90 per ounce for a total gross gain of $2970 from our entry price of $22.20 per ounce.

We liquidated the 2 February Gold ($1225 strike) call options at $31.20 each for a total gross loss of $3740 from our entry price of $12.50 per ounce.

 So the total gross loss on the February Gold $1175/$1225 ratio call spread was $770.

 We have a very strong position left for our remaining February gold positions, which includes the February Gold $1140/$1180 call spread and the outright February Gold $1270 call, if you have followed all of my recommendations.  So, if February gold wants to head for the moon as some analysts suggest, then this position will do very well.  Don’t forget, we have a lot of April positions as well.

 Don’t forget that we are still trying to buy back the four short February Gold ($935 strike) put options for $1.00 per ounce each.

_________________________________________________________________________________________________________

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

Short 4 February Gold ($935 strike) put options at $6.20 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 60 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 118 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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We were able to liquidate the February Gold $1175/$1225 ratio call spread at about $11 per ounce.  That will result in a loss that I will outline in Friday’s comment.  But at least that potential risk is off the table in case gold blasts off some more over the next several days.  And don’t forget that we locked in a profit on the February $1100/$1130 call spread today as well.  I don’t mind gold rallying, I just don’t want it to get ahead of itself too fast, because that affects our ratio spreads.  Our regular vertical call spreads, like the February $1140/$1180, 1*1 spread,  work just fine under this same scenario.  So we try to eliminate the unlimited risk piece and keep the limited risk trade that is making money.

I will be writing to you on Friday.

 HAPPY THANKSGIVING!!!!!

 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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Gold is in blast off mode, and the included chart looks like gold is closer to the beginning of a mini blow-rally versus at the end.  Therefore, our February $1175/$1225 ratio call spread could be in jeopardy in the short run.  I recommend attempting to liquidate that spread at a cost of around $9.00 per ounce.  That will result in a small loss, but I would rather do that than risk a sharply higher open on Friday or Monday that could make that loss bigger.  Remember that we already took profits earlier today on the $1100/$1130 call spread and we still have the $1140/$1180 call spread working.  So let’s try to take this risk off the table right now.  The risk of any ratio call spreads is if the underlying market rallies towards the upper strike price too fast without much time value erosion.  Gold is doing that right now, on this particular spread.  Eventually, I fully expect gold to have a nasty $100 + pull back, but that may not come until gold rallies $100 first.

 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 making new all time highs today, up $13.60 per ounce at $1181.00.  The included chart shows that the gold market is in very strong up move at present.  The directional movement indicators are bullish and the purple ADX line is now over an index level of 52 which is very over bought.

 Although I still believe that gold will eventually rise to $1350 in the first quarter of next year, that doesn’t mean that a large correction won’t happen along the way.  Don’t be surprised the see $50 to $100 corrections in gold from this point on.  Please do not try to play the corrections as these moves when they come will probably only last days before seeing sharp rebounds.  Trade with the trend only!  Be patient for chances to add to bullish trades.  Don’t chase this market right now!  This  increase in volatility was expected and the coming sharp drops are expected going forward.  As the volatility in gold and other commodities increase over time, you will see why I never recommended being in the futures contracts, buy rather call and put spreads.  The people in futures contracts will be humbled like no one’s business if they happen to be on the wrong side of an overnight $50 move.  Stay tuned because those days are fast approaching.  When the ADX line begins to bend over, prices will be vulnerable to a big drop.  Stay tuned.

 We were filled this morning on the February Gold $1100/$1130 call spread at a $22.00 per ounce credit.  The result is a gross profit of $1400.

 Don’t forget that we are still trying to buy back the four short February Gold ($935 strike) put options for $1.00 per ounce each.

_________________________________________________________________________________________________________

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

Short 4 February Gold ($935 strike) put options at $6.20 each.

Long 2 February Gold ($970 strike) put options at $10.60 each.                  (February Gold options expire in 62 days).

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 ($1175 strike) call option at $22.20.

Short 2 February Gold ($1225 strike) call option at $12.50 each.

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

__________________________________________________________________________________________________________

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.                  (April Gold options expire in 120 days).

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.

 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 $4.40 per ounce at $1170.60 this morning as I write following yesterday’s strong rally.  The included chart shows the strong rally in gold that has put this market in overbought territory.  Any time a chart begins to go vertically upwards, you always have to be wary about its ability to continue in that direction.  My experience is that when this vertical stage ends, the resulting selloff is equally as vertical, meaning that volatility will expand as well.  This can make for some very treacherous trading and usually bad results for those that choose to jump into the fray. 

 Although I still believe that gold will eventually rise to $1350 in the first quarter of next year, that doesn’t mean that a large correction won’t happen along the way.  Don’t be surprised the see $50 to $100 corrections in gold from this point on.  Please do not try to play the corrections as these moves when they come will probably only last days before seeing sharp rebounds.  Trade with the trend only!  Be patient for chances to add to bullish trades.  Don’t chase this market right now!  This  increase in volatility was expected and the coming sharp drops are expected going forward.  As the volatility in gold and other commodities increase over time, you will see why I never recommended being in the futures contracts, buy rather call and put spreads.  The people in futures contracts will be humbled like no one’s business if they happen to be on the wrong side of an overnight $50 move.  Stay tuned because those days are fast approaching.  When the ADX line begins to bend over, prices will be vulnerable to a big drop.  Stay tuned.

 For today, I recommend attempting to take profits on our February $1100/$1130 call spread at a credit of $21.50, since we weren’t filled on this trade yesterday.

 The December Gold trades ended yesterday, so here are the overall results of both the December covered call write and the December $1100/$1180 ratio call spread campaigns that we have been steadily liquidating since last Wednesday.  Since some trades were offset out of order, I will organize the trade results so they are easier for you to interpret.  The bottom line results were the same, it’s just that the computer offset some items in different order.  If you have questions about that, just give me a call.  Here are the results based on the average fills that clients actually had:

 The covered call write:  We were originally long one December Gold futures contract from $1018.

                                                We were also short one December Gold ($970 strike) call option.  We received $58 per ounce    for selling(writing) that call option.

                                               The $970 call was exercised giving us a short futures contract at $970 which immediately offset with our long from $1018.

                                               That futures offset resulted in a futures loss of $48 per ounce but as a result of the exercise we get to keep the $58 per ounce the market paid us up front.

                                               So the bottom line result of the covered call write trade was a loss of $48 plus a gain of $58 for a total gross gain of $10 per ounce which is $1000!

The ratio call spread:  We were long one December Gold ($1100 strike) call option from $16.30 per ounce.  That means that we paid out $1630.

                                            We were also short 2 December Gold ($1180 strike) call options from $8.40 per ounce each.  That means that we received $840 each times two which equals $1680.

                                            We bought back the December $1180 call option last week for $1.00 per ounce.  That resulted in a gain of $8.40 minus $1.00 = $7.40 per ounce times two or $14.80, $1480 gross.

                                            Last Wednesday, we began dragging a stop behind the gold market just in case prices began to fall sharply to protect our $1100 call option.  On Thursday we were filled at $1131.

                            The December $1100 call was exercised that gave us a long futures contract at $1100 that immediately offset with our short position at $1131 which resulted in a gain of $3100.

                            So the bottom line results of the ratio call spread was: a loss of $1630 on the original cost of the $1100 call plus a gain of $1480 on the ($1180) calls plus a gain of $3100 on the

                            Liquidation between the futures contracts at $1100 and $1131.  So, -$1630+1480+$3100 = $2950 was the total gross profit from the ratio call spread.

 So the covered call write and the ratio call spread made us $1000 and $2950 gross, respectively or an overall gross gain of $3950!

 (The computer offset some things in different order but the bottom line results were the same.)

     **Yesterday, we also were filled on one of our GTC orders to buy back the February short gold puts.  Yesterday we bought back 4 short February Gold ($950 strike) put options at $1.50 each.  We originally sold those put options at $6.80 per ounce so this resulted in a gain of $6.80 – $1.50 = $5.30 per ounce or $530 gross times 4 contracts = $2120!!  This trade was originally part of a ratio put spread with the long two February $970 puts, so this gain effectively offsets the total cost of the $970 puts.  Now we basically own the February $970 puts for free, just in case the gold market tanks between now and 63 days from now.        Don’t forget that we are still trying to buy back the four short February Gold ($935 strike) put options for $1.00 per ounce each.

_________________________________________________________________________________________________________

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

Short 4 February Gold ($935 strike) put options at $6.20 each.

Long 2 February Gold ($970 strike) put options at $10.60 each.                  (February Gold options expire in 63 days).

Long 1 February Gold ($1100 strike) call option at $32.60.

Short 1 February Gold ($1130 strike) call option at $24.60.

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 ($1175 strike) call option at $22.20.

Short 2 February Gold ($1225 strike) call option at $12.50 each.

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

__________________________________________________________________________________________________________

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.                  (April Gold options expire in 121 days).

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.

 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.

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All of our remaining December Gold option positions will be exercised and liquidated today, so I am beginning to cover the February contract at this time.   I will report the overall gain in the December positions tomorrow.

February Gold is sharply higher this morning, up $22.30 per ounce at $1170.50 as I write going along with a sharply lower US Dollar.  The enclosed chart shows that the directional movement indicators are bullish along with the ADX line sharply rising.  Please note that the gold market is getting way over bought in the near term and caution should be observed.  Although I still believe that gold will eventually rise to $1350 in the first quarter of next year, that doesn’t mean that a large correction won’t happen along the way.  Don’t be surprised the see $50 to $100 corrections in gold from this point on.  Please do not try to play the corrections as these moves when they come will probably only last days before seeing sharp rebounds.  Trade with the trend only!  Be patient for chances to add to bullish trades.  Don’t chase this market right now!  This  increase in volatility was expected and the coming sharp drops are expected going forward.  As the volatility in gold and other commodities increase over time, you will see why I never recommended being in the futures contracts, buy rather call and put spreads.  The people in futures contracts will be humbled like no one business if they happen to be on the wrong side of an overnight $50 move.  Stay tuned because those days are fast approaching.  When the ADX line begins to bend over, prices will be vulnerable to a big drop.  Stay tuned.

 For today, I recommend attempting to take profits on our February $1100/$1130 call spread at a credit of $21.50.

 Short 1 December Gold ($970 strike) call option at $58.00 per ounce.       (December gold options expire today!).

Long 1 December Gold ($1100 strike) call option at $16.30 per ounce.

_________________________________________________________________________________________________________

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

Short 4 February Gold ($935 strike) put options at $6.20 each.

Long 2 February Gold ($970 strike) put options at $10.60 each.                  (February Gold options expire in 64 days).

Short 4 February Gold ($950 strike) put options at $6.80 each.

Long 1 February Gold ($1100 strike) call option at $32.60.

Short 1 February Gold ($1130 strike) call option at $24.60.

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 ($1175 strike) call option at $22.20.

Short 2 February Gold ($1225 strike) call option at $12.50 each.

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

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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.

 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.

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