CPM Group Trade Signal - November 8th 2019
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Prices as of 9:37 a.m. EST (14h37m GMT) 8 November 2019 $1,463.10 (Basis the December 2019 Comex Contract).
Direction: Stand Aside
Target Price / Range: $1,400 -$1,520
Timeframe: 08-11-2019 to 15-11-2019
Gold prices dropped below $1,480 Thursday, triggering heavy selling. This was in line with financial market optimism related to a potential positive move in the U.S.-Chinese trade war and overall global economic conditions. Gold is trading at a major trigger point Friday, around $1,450 - $1,460. Prices could move $40 - $50 higher or lower at this point. The risks of going long or short physical, futures, or forwards are too great in CPM’s view, since the probability is 50-50 of a move in either direction. A risk:reward ratio of 1:1 is not attractive to us. We prefer higher reward probabilities to risks. CPM would neither go long or short at this point. In such a situation our advice to paying clients would be to buy a butterfly strangle option, buying both a put and a call to reduce our risks while positioning the investor to benefit from a move in either direction, or moves in both directions in quick succession. CPM works with accredited investors in options and other investments. For physical or futures investors we would look to reenter as buyers or sellers after prices move off of the current range.
Note: Discretion should be allowed at +/- $0.50 from the target.
Disclaimer – Past performance is no indication or guarantee of anticipated future profits, and neither Kitco Metals Inc. nor CPM Group can accept any liability or responsibility for any loss suffered as a result of gold price fluctuations. Gold as a commodity is not a specified investment for the purpose of giving advice under the Financial Services and Markets Act 2000. Therefore this trade recommendation does not give rise to rights to claim compensation under the Financial Services Compensation Scheme. CPM Group is a registered CTA with the U.S. NFA and CFTC. At times the principals and associates of CPM Group may have positions in the precious metals, commodity, and equities markets. CPM Group also manages investment and industrial positions in markets for its clients.