I’ll be glad when the elections are over. The manic price swings and wild volatility have made short-term trading virtually impossible.
It’s easy to get lost in the day-to-day price swings…so let’s step back and look at what we know. We know that miners opened a large prices gap this morning. We know that almost all gaps get filled at some point. We know that since 2011 metals and miners tend to peak in October, decline in November and bottom in December. We know that the price action off the September low can be viewed as corrective in nature – not impulsive. If it were impulsive, there should have been sufficient upside follow-through after the October 11th breakout day.
I remain suspicious and believe the seasonal October through December track record supports lower prices. But you never know, maybe this is the year that pattern breaks.
It’s not out of the question to see gold and silver spike to new highs on or before the elections. However, to support the bullish argument, I’d need to see a consistent 2-3 day (high-volume) post-election rally in precious metals. If established, I’d turn immediately bullish and expect a rally into year-end.
I’m interested to see how prices finish the day and their reaction to tomorrow’s employment report.
Note: I’m considering a potential lottery play in GDX. If this is just a 1-3 day bounce before a sharp collapse, it may be worth looking at a few OTM put options in GDX for the November 16th, 2018 expiration. I’m considering the $18.50 or the $18.00 strike. I’ll let you know if I take the trade. It would be a very-very small position.
I’m off to a meeting. The Thursday report will be out between 5:00 – 5:30 PM.