Analysis of my recent Gold trades, and where does Gold go next?

June 26

Disclaimer: I am a novice trader and nothing I say should be considered financial advice, I am not profitable, do not follow my trades.

I'm not going to go over all my trades today, I'm feeling lazy, yesterday was very profitable, today I lost about half of what I made yesterday. And so the journey continues, but I did want to talk about gold for a bit.

Gold has had quite a run lately, breaking a 6 year resistance level, and finally pulling back a little bit after a almost vertical move. I find it interesting that bitcoin and gold were rallying together. The amount of money required to move gold like it has moved in the past month is unimaginable. The only thing that makes me prefer Bitcoin to gold in the very long term is that I feel like either we will one day create technology that produces gold from other elements (is that theoretically possible? Let me know in the comments), or asteroid mining or something will decrease gold's scarcity a bit. But in the medium term, like the next 5 years or so, I am bullish on gold.

One of the ways I feel I have grown as a trader is that I am now able to get on the other side of the trade if something changes, before I would almost never switch from long to short or short to long on a asset, maybe because it felt like admitting I was wrong? Now I have much less of a problem with doing so. This ability worked well with gold over the last few days, a trade I am rather proud of. It didn't start out too well though, it ended well.

My recent gold trades started on June 14, before the open I was watching gold try to break out past that 1350 an ounce major resistance level, so when the market opened I went long GDX July 19 $24 call @ 0.50 ($50) when it looked like it was going to break out, and when it was rejected I exited near the end of the day for a 7 dollar loss. It looked like a failed breakout to me. I don't normally try to trade breakouts but a multiyear gold resistance breakout was too enticing to ignore. So I switched directions at the end of the day and bought a NUGT ( which is basically a 3x leveraged gold miner ETF, not designed for long term holds but for short term trades) $19 July 5 put for 0.62 ($62). Although NUGT did go down a little bit the next day, my option contract never became profitable. One of the downsides of options, especially out of the money ones, is you can be right but still lose money. On June 19, Gold futures again tested 1350 an ounce and this time it was different and it ended up closing above that level providing confirmation to the breakout. I bought a $25 GDX July 19 call for 0.30 about an hour before market close. I should of probably thrown more then thirty bucks at this but as I said before I don't normally trade breakouts so I was out of my depth. I'm still in my original NUGT put its almost worthless so I don't see much point in selling it. If I had known what Gold was going to do ahead of time obviously I would of just held my original $24 call and sold it for $250 bucks. But all I can do is react and predict as best I can. So to recap I went long on gold on June 14, the breakout failed, so I went short, the breakdown failed, so I went long again. I held my second GDX position until 6/24/19 when I sold it for $118. I rolled over into a $26 GDX call expiring August 16th bought for 1.06 ($106). At the time I was basically like I'm holding this thing until GDX hits $30 bucks! I was blinded by greed almost. Then a trader I respect greatly called for short term top in gold, a call he made after market on June 24. So I took a second look at the chart and realized there was some major resistance for gold at 1442 an ounce. So at market open on June 25th I decided to switch directions once again! I sold my GDX $26 August 16th call for 1.21($121), and instead bought into a weird home cooked short term short biased long term long biased gold strangle position. This strangle I created by buying a NUGT $23.50 July 19 put for 0.57 ($57) and a GDX $28 August 16 call for also 0.57($57). The NUGT put meant I was getting 3x leverage to the downside, but with less time value then the long but less leveraged side of the strangle which was the GDX $28 call. This ended up working great, and I think it will continue to work on the long end which I am still holding. I sold the NUGT put for 1.17($117) this morning at the open and it was a good thing I did, at least today, because NUGT recovered for the rest of the day. If GDX continues to go up, or at least goes up significantly before August 16, I will have made even more from this weird chain of trades. Maybe I changed directions too much, and I made some mistakes in the beginning of this move but I feel like I traded it well overall. If you add everything up, A $62 loss (not realized yet, but NUGT reaching below $19 by July 5th seems unlikely to me) combined with a $7 loss from my first two positions, equals $69. Then I made $88, $15, and $67 for a total of 170. I am currently holding the GDX long $28 call which is at 0.45 I think, so that’s also a $12 loss currently. So a total profit currently of $89, or if the GDX call goes to zero, then it will be a $44 profit. Or you can also look at it like a $44 profit and a free call option. Overall a complicated trade chain that ended well and can potentially do even better. I will know whether I'm going to hold that call or sell it at the end of the month. This is because of what is setting up on the monthly GLD chart. Gold is approaching a very long term trendline breakout on the monthly chart. If GLD closes above around $128.13 on the monthly chart, meaning if GLD is above 128.13 at market close on Friday, then I believe GLD could reach $160. I have no idea how long this will take of course, but this breakout on the monthly chart can't be ignored.

Gold Futures Chart