Since the start of 2013 SK OptionTrader has been bearish on gold and silver. We have made significant profits on that view, including 104% in mid June. Last week we added to our winning streak and closed two more at a profit; having bought DZZ early in June, we were able to take profits of 21.01 and 25.78%.
Through May we used a shorted a double long gold ETN called DGP to take a shrot position on gold. After just 18 days this showed a a 12.64% profit, and we closed the position to re-open at better levels that we belied would appear before the June's NFP data release.
At the beginning of June we saw the release of the employment data for May, which came in positive once again. Positive employment data means that plans for further monetary easing, the key driver behind gold prices in recent years, become increasingly less likely. Therefore following this release we bought DZZ, a double short gold ETN, in order to benefit from the decline in gold prices that we believed would follow.
On June 6th we allocated 10% of our portfolio to DZZ, opening the position at $6.09. The following day gold prices declined less rapidly than we expected, and as a result we doubled our position only a few cents higher, allocating an additional 10% at $6.33.
Through June gold prices deteriorated, major falls occurring as a result of the Fed meeting and the increasing likelihood of tapering plans. Once more talk of tapering plans was evident, gold fell through its closest support level at $1350, and then through $1260. Once the $1260 level was broken the risk reward dynamics of our short gold trade changed.
The rapid falls that we have experienced in the last few weeks made the chance of a bounce in gold prices far more likely, and thus we saw that it was time to take profits on our short position. We signalled to our subscribers to close both of our DZZ positions, taking profits of 21.01 and 25.78% in less than 3 weeks.
This is far from the first time that we have made profits from falling gold prices; as gold collapsed with its biggest one day fall in COMEX history we made profits of 175% in just 4 days. We have also made hefty gains being short mining stocks, with 135.71% made on a trade in April and 212.5% made shorting Hecla.
All 20 of our closed trades this year have been at a profit, which have brought our year to date return on closed trades up to 55.58%. Our model portfolio has returned a total of 727.54% since its inception nearly 4 years ago, and of our 133 trades 87.97% have been profitable. We are currently making considerable gains from the decline in gold prices and we have an annualised return of 71.76%. If you want to find out how what trades that we will be making next then all you have to do is sign up via the buttons below.
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