Gold Has Backed Down to a Lower Trading Range

Above is a www.Stockcharts.com graph of Harmony Gold of which I have been a buyer below $11. From the graph, it can be seen that the recent high for HMY was above $13. It should return to that level as the dollar continues to fall and as gold breaks out of consolidation at the current level of around $880.

Silver has broken above $16 and seems to be sprinting to catch up with gold. The three silver stocks, I prefer are CDE, PAAS, and SSRI. Options are traded on both CDE and PAAS. At present I prefer the options rather than the stocks, because of the leverage offered by options. Of course, one should have a higher risk tolerance for trading in options.

The price of the option is based upon the difference between the option exercise price (the price at which the holder can use the option to either buy or sell the underlying stock) and the length of time to the time when the option expires. The time portion decreases with the passage of time. As the expiration date approaches, the value of each option becomes increasingly based solely upon the difference between the exercise price and the market price of the underlying stocks.

There are two types of options: Puts provide the holder of the option the right to sell (or put) the underlying stocks at the exercise price until the expiration date of the option. Calls provide the holder of the option the right to buy (or call) the underlying stocks at the exercise price until the expiration date of the option. Both are sold in individual contracts of 100 shares. Thus, the price paid for one contract is 100 times the market price.

We make our plans, commit them to the Lord, execute the plans, and give Him the praise for the results. It is very important to recognize that it is He, alone, Who is in control of everything. He also is working all things out in accordance to His plan for the good of His elect people.

Best to each Doug