basing patterns highlighted yesterday, and the puts I wrote on GDX"> basing patterns highlighted yesterday, and the puts I wrote on GDX" />

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April 16, 2008

Base Jumping, Part II

Talk about instant gratification. Precious metals miners gapped higher out of the basing patterns highlighted yesterday, and the puts I wrote on GDX yesterday are worth barely more than half of what I got for them.

stock chart

An indicator I follow, the ratio between the XAU and the price of gold, shows that we are still near the bottom of the zone in which the ratio fluctuates:

stock chart

I would venture to guess that as this next leg up in the precious metals bull unfolds, miners will outperform gold, so among other strategies, I see a lot of put-writing on GDX in the mix.

 

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