// archives

precious metals

This category contains 3 posts
bigwinner2

breakdown of a big winner

Last week I closed out the last half of my biggest winner of the year.  Let’s take a closer look to see what lessons and tactics we can take from it and use going forward.

As I’ve mentioned before, I had a lot of success trading precious metals miners from 2008 to 2011 which, understandably, caused me to grow fond of them.  Unfortunately, this fondness had me “going back to the well” more often than was warranted, resulting in unnecessary losses.  The lesson here is to not become so enamored with a particular investment that you are ignoring or discounting the pitiful technicals.  In other words, don’t fall in love with something that can’t love you back unless you enjoy losing money!

Having gotten burned several times, I was initially skeptical of the rally when gold shot up at the beginning of the year.  Unfortunately, by the time it was apparent that this move was different and appeared to have legs, I didn’t see a safe way to get involved.  The key was to be patient and wait for a low risk buying opportunity.  The signal I was waiting for arrived on March 29th in the form of an 821x buy signal in GLD which I tweeted out.

821x buy signal

821x buy signal with obvious place for stop around $116

Seeing this, I went through my watchlist of miners looking for a good setup.  The one that looked best to me was Pretium Resources (PVG).

PVG consolidating around the 200dma

PVG consolidating around the 200dma

I entered a limit order for $5.30 a share which was the closing price on the day PVG first flashed an 821x buy signal, and got filled the next day.  After a week of consolidation, it broke out of it’s wedge formation and was up over 50% in little over a month!  Shortly thereafter, it had a sharp pullback to the 21 day ema where it put in a pivot with a low of $7.43.  When I saw that the pivot wasn’t going to hold a few days later, I sold half of my position at $7.33 locking in a nice gain of 38% on that piece.

sold half here with the pivot broken and the moving averages curling down

sold half here with the pivot broken and the moving averages curling down

A few days later, PVG gave an official 821x sell signal.  Having already locked in gains on half of the position, I felt comfortable giving it one more day to see if the closing low of $7.04 would hold.  If PVG had closed even one penny below that low I was prepared to close the rest of the position.  Fortunately, it held and proceeded to give an 821x buy signal a week later!  In hindsight, I can see that it would’ve made sense to go back to full size at this point.

PVG held $7.04 and the 50dma and then gave an 821x buy signal

PVG held $7.04 and the 50dma then gave buy signal number 2

The second move was even more explosive than the first, putting my remaining half position up well over 100% by mid July!  Then last week, it finally gave another 821x sell signal.

second 821x sell signal of this trade

second 821x sell signal of this trade

Again, because I had already locked in profits on half of the trade I felt comfortable giving it one more day to see if the closing low of $10.61 would hold.  Unfortunately, this time it didn’t, so I closed out the balance of my position at $9.71 for a gain of 83%.

all good things come to and end...

all good things must come to an end…

Putting the two halves together, I netted a gain of 61% on this trade making it my best trade of the year so far.  For reference and comparison, my biggest loser of the year was WYNN for a loss of only 6%.  Letting your winners run and cutting your losers short is the key to successfully growing your savings in the stock market.

I hope that reviewing this trade demonstrates one way the 821x trading system can be used in practice.  If you have any questions about this trade or the 821x trading system in general, don’t hesitate to ask!

goldwatch

time to watch gold

I made a lot of money on gold’s massive run from 2008 to 2011.  Unfortunately, I unnecessarily gave much of it back because I had not yet been introduced to technical analysis.   Technical analysis of price action allows you to identify and trade along with trends.  Without this knowledge, you are essentially trading blind.  You might as well be gambling.

Gold peaked in 2011, went sideways in 2012 and started heading lower in 2013.  It’s been trending down ever since, going from a high of nearly $1,900 an ounce in late 2012 to a low of  $1,045 in December of last year.

There is no compelling reason to buy (or even own) something in a downtrend if you are trying to make money.  Sure, you could happen to buy in at the exact bottom by pure luck, but do you really want the success of your trades to be reliant on luck?  Trying to pick exact bottoms and tops is a fool’s game.

It’s much smarter to put the odds in your favor BEFORE risking your hard-earned money.  If buyers are gaining control of an asset over sellers we WILL see it in the price action.  That’s our cue to start paying closer attention.  Don’t worry, there’s usually plenty of meat in the middle of a move for us to profit on.

We are starting to see signs that the down trend in gold is possibly coming to an end.  Gold is up 16% year to date, breaking the down trend line of lower highs for the last two years.  Price is well above the 50 week and 200 day moving averages, both of which are starting to turn up.

gold is breaking the down trend line in place for the last two years

gold is breaking the down trend line that’s been in place for the last two years

Gold is currently extended to the upside.  With the possible exception of buying physical coins as “insurance”, I would not chase it here.  However, I believe consolidations above the 200 day moving average are buyable for a trade.  Watch $GLD, $GDX and $GDXJ for low risk 821x buy signals.

It may finally be time to take gold out of the penalty box and start keeping a closer eye on it.

libertopia (800x450)

how I went from spender to saver

I spent every penny I made.  Knowing that I would usually receive an annual bonus, I would buy something from Best Buy or somewhere else a year in advance on credit, with no payments and no interest for a year.  When my bonus came, I would pay off whatever I bought in the prior year and then buy something else.  I would literally spend my bonus a year before I received it!  I did this year after year.

Since I had no savings, I sold stock options I’d received from my employer so that my family could attend my sister’s wedding in Hawaii.  We planned to visit my brother-in-law’s family in California in the following year.  However, when it came time for the trip in the fall of 2008, the market was tanking and my stock options were worthless.  I had to cancel the trip.  It was humiliating.

I’ve mentioned before that the market crash of 2008 is what marked the beginning of my interest in stocks.  But the last post got me thinking; specifically, what was it that caused me to make the switch from spender to saver?

The Journey

Thinking back, the shift actually began at around the same time.  It’s amazing how seeing your 401k chopped in half can focus the mind.  Prior to this, I was just kind of floating through life with no concrete long-term plans.  The 2008 crisis shook me up and inspired me to start looking for ways to mitigate economic risks that I’d never even noticed before.  Saving money and buying precious metals was part of it.  Increasing personal resilience by planting fruit trees and starting a garden was another step we took.  Unfortunately, I also thought that “spreading the word” and political action were solutions as well.

This is where I can point to a second pivotal event in my journey.  In 2011, I was spending a lot of time (and money) making music with my band, Rothbard.  We were invited to participate in an event called Libertopia in San Diego.  We played our set and the rest of the time I listened to many of the speakers.  The overarching theme and philosophy I took away from that conference literally changed the trajectory of my life.

I realized that it’s futile to try to “mobilize a majority”.  There’s no need to try to conjure up a “consensus”.  For the first time in my life, I ascertained the true essence of government; coercion.  The majority forcing it’s will on the minority is immoral and I want no part of it, even if my ideas happen to be in the majority.  Secondly, the elusive if not impossible goal of trying to change the minds of enough people can become convenient excuses that ultimately keep me spinning my wheels but going nowhere.

The reality is I can live a rich life of freedom NOW without these things.

Prior to this, I had been fixated on a lot of the doom and gloom out there.  Out of control government spending and debt, stifling regulations, corrupt politicians, etc., etc.  Of course, there are plenty of negatives I can and did focus on, but wasting my limited time and energy fretting about things out of my control left me feeling frustrated and unhappy.

Governments will do what governments do.  Politicians will continue to do what politicians do.  I can’t control them.  I can, however, improve society by leading by example; by presenting it with “one improved unit“, as Albert Jay Nock has said.

The truth is, the people and institutions I thought were holding me back, can actually do little to stop me from living a life of freedom.  All I had to do was define what being free meant to me and then find creative ways to get there.  As I started confronting the obstacles in my path, I found that many of them existed only in my mind.

Let me give you some idea of how Libertopia elevated my vision.  Prior to this event, I was arguing with my HOA about my right to put a Ron Paul sign in my front yard.  I was also spending a lot of my free time going through boxes of coins looking for copper and silver.

After the event, my wife and I looked at investment property in the Dominican Republic and then purchased a rental house in San Antonio.   I also started getting serious about learning how to make money with stocks.

Key Concepts

Given that background information, I’ve isolated two key concepts that were instrumental in my transformation from spender to saver.

  1. A clear vision – once you get a clear picture of where you want to go, it makes all of your other decisions so much easier, including your spending decisions.
  2. Viewing money as capital – Basically, this is the realization that you can use money to make even more money.  This hit me as I started to make money with stocks.  I even got a taste of this when I saw the value of the gold and silver coins I had purchased rise in value.

Of course, no two people take the exact same path, but I hope this little walk down memory lane is helpful to you on your journey towards a life of freedom.









Learn how to grow your savings using the stock market.

Sign up to receive actionable trade ideas with video market analysis AND a complementary copy of my 821x trading manual in your inbox immediately!

Model 821x Trade

stock quote day % change total % change
YRD
23.38