Headline - Gold Due A Correction
A number of things happened over the weekend that are leading me to make a few changes to the portfolio. The fighting in Libya and ongoing wars created by the US will be good for Raytheon the stock I added to our portfolio last week.
Raytheon pays a 4.3% Dividend. Has an exceptional EPS of 5.44. A P/E of 7.4 and is wallowing around all time lows. The 1 year target is 60 and it is currently at $40.20. We added it to our portfolio at 41.20. It's currently trading at around $40 so if you haven't picked it up yet now may be a good time.
A number of reasons why I am buying more puts on Gold.
We received an alert from Interactive Brokers on Friday that some commodities would be seeing margin hikes next week. The alert is posted in my blog. This means Gold & Silver. We are all still recovering from the margin increases in Silver in May which brought the price from $50 to $30 in a few days. Silver is more volatile than Gold so it is unlikely we will see the same effect as we did in Silver. Support for Gold is at 1650 & 1550.
There has also been a lot of open interest this week in Gold puts at 1550. We are seeing record premiums for Gold puts so the market is expecting a correction.
I've also published a report on the blogtheabundanceengineer.blogspot.
from Mark Linker at Zee LLC gives a very good case for a temporary correction. Mark has been in the business for a while and is a great analyst.
There is a great argument from Peter Schiff on Bonds being overvalued aswell.
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Finally the GLD putsGLD110930P00150000 we bought a few weeks ago with a strike of 150 are up 35% today yet GLD is up 2.5%. This is highly unusual downside activity while GLD is rising.
Therefore I have added to our Gold puts as insurance for our Gold long position. The adition to our Gold puts which we purchased today at 0.27 brings our average price to 0.34. Now with regards to asset allocation and money management our puts should only be a maximum of 10% of the value of our long position. If you have $1000 in GLD ETF. Puts should be no more than $100 total value.
Bonds
I am still short bonds and recommend adding a small amount to the TBT position. It is currently 50% below what we purchased it for as always restrict to a maximum of 5-10% of your total portfolio.
OIL & GAS
Our ultra short oil and gas ETF DUG has performed well since we bought at 31.64 on Thursday. We actually got filled at 31.84 however that happened. It currently stands at 36.38. up 14%.
PFE never reached our buy price so we didn't get filled on it yet.
I am currently waiting for buy signals on certain stocks but I think it's going to take Beranke's magic printing press to get the market moving again.
Our potfolio is here.
"Whatever happens comnmodities win"
Gold & Silver
We continue to accumulate and recommend buying Gold & Silver on the dips. We like the ETF's as a long term hold.
We continue to recommend holding 10 - 30 % of your investment portfolio in Physical Gold & Silver coins.
Become your own central bank. Purchase Physical Gold & Silver & store it at home. Your money in the bank is being used by the bank to purchase Gold for their benefit. Cut out the middle man. Empower Yourself.
The accumulation of precious metals has to be the most sound financial decision anyone could make.
For those considering making the shift from paper investments to Physical Gold & Silver
Email for a quote.
"Whatever happens commodities win"
Best,
Robert McManus
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