Has the shaky market got investors worried? The housing slump leaves investors with little to cheer about and the news stream is littered with countless vignettes of a stagnating and declining US market. Today, the PowerOptions weblog will take a look at gold and a few stocks in the gold sector and vet them for solid covered call opportunities.
Audio Podcast:
An audio podcast of this article is available at: poweropt.com/podcasts/2007_04_02_Gold.mp3
Below are five reasons why the gold market may be up this year:
1. China’s gold production is up nearly 26% this year and analysts are saying this still falls short of their demand by nearly 100 tons. With news this week of China surpassing the US as the number one exporter to Europe, they will continually be looking for sound investments outside of the US dollar.
2. Two new Gold index funds are coming online in India this month by Benchmark Mutual Fund and UTI Mutual Fund. It is likely as these ETF funds come online they will purchase massive numbers of gold shares.
3. Reuters is predicting the coming year will bring historic demand levels to the global gold market as US stocks are predicted to plateau. An article last Friday reported, “Gold tends to move in line with oil because high oil leads to inflation, which drives people to buy gold as a hedge, goes the argument.”
4. The South American chief of Newmont Mining (NEM), the world’s 2nd largest gold producer, said last week, “We think that yes, there is a great expectation, of a great possibility (that gold prices) will be maintained and be much stronger in the second half (of this year).”
5. The IMF (International Monetary Fund) reports the overall amount of Gold held by Governmental central banks declined for the eighth straight year last year. It is likely as other investment opportunities become less viable, countries will look to gold as a safe harbor.
Potential Trades:
All of the following option trades have 50 days until expiration. These trades were discovered using the powerful suite of option search tools found at PowerOptions.
| PowerOptions covered call search (50 days) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Sym |
Stock Price |
OPTION | Strike Info |
Opt Bid |
% Dnsd. Prot. |
% If Unch. |
% If Asgnd |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SA | $14.60 | SAEC | 07 MAY $15.00 | $0.95 | 6.50% | 7.00% | 9.90% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GRS | $17.67 | GRSEW | 07 MAY $17.50 | $1.20 | 6.80% | 6.30% | 6.30% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GFI | $18.48 | GFIEW | 07 MAY $17.50 | $1.50 | 8.10% | 3.10% | 3.10% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NEM | $41.99 | NEMEI | 07 MAY $42.50 | $1.55 | 3.70% | 3.80% | 5.10% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SA – Seabridge Gold Inc. acquires, develops and explores mineral properties in the United States and Canada. This trade involves the May $15 call option and offers 6.5% downside protection and 9.9% potential profit if the stock is above the $15 strike price at the end of the option period.
GRS – Gammon Lake Resources Inc. acquires, develops and explores mineral properties primarily in Mexico. This trade involves the May $17.50 call option and offers 6.8% downside protection and 6.3% potential profit if the stock is above the $17.50 strike price at the end of the option period.
GFI – Gold Fields Limited engages in the exploration and production of gold in South Africa, Ghana, Australia, and Venezuela. This trade involves the May $17.50 call option and offers 8.1% downside protection and 3.1% potential profit if the stock is above the $17.50 strike price at the end of the option period.
NEM – Newmont Mining Corporation engages in the exploration, acquisition, and production of gold properties in the United States, Australia, Peru, Indonesia, Ghana, Canada, Bolivia, New Zealand, and Mexico. This trade involves the May $42.50 call option and offers 3.7% downside protection and 5.1% potential profit if the stock is above the $42.50 strike price at the end of the option period.
Competitors:
Competitors for SA include: and Gold Summit Corporation (private).
Competitors for GRS include: Apollo Gold Corp. (AGT), and Kimber Resources Inc. (KBX).
Competitors for GFI include: AngloGold Ashanti Ltd. (AU), Barrick Gold Corp. (ABX), Newmont Mining Corp. (NEM), Randgold Resources Ltd. (GOLD), and Harmony Gold Mining Co. Ltd. (HMY).
Competitors for NEM include: AngloGold Ashanti Ltd. (AU), Barrick Gold Corp. (ABX), Gold Fields Ltd. (GFI), Agnico-Eagle Mines Ltd. (AEM), Yamana Gold Inc. (AUY), Bema Gold Corp. (BGO), Compania de Minas Buenaventura SA (BVN), Coeur dAlene Mines Corp. (CDE), Eldorado Gold Corp. (EGO), Freeport-McMoran Copper & Gold Inc. (FCX), Goldcorp Inc. (GG), Gammon Lake Resources Inc. (GRS), Gold Reserve Inc. (GRZ), Golden Star Resources Ltd. (GSS), Harmony Gold Mining Co. Ltd. (HMY), Iamgold Corp. (IAG), Kinross Gold Corp. (KGC), Crystallex Intl. Corp. (KRY), Meridian Gold Inc. (MDG), Miramar Mining Corp. (MNG), Northgate Minerals Corp. (NXG), and Teck Cominco Ltd. (TCK).
For more information about how to identify and research great option trades, visit the PowerOptions website. There you will find the data you need to make quick, clear, and informed decisions. You can trade knowing you have found the best investment. Also, PowerOptions will allow you, with a few quick clicks, to quickly and accurately compare trades. PowerOptions‘ premium customer support is second to none in the industry. They can be easily contacted when you need them at their toll-free number to answer customer questions. Call them now toll free at 877-992-7971.
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[tags] gold, China, Europe, Benchmark Mutual Fund, UTI Mutual Fund, ETF, Reuters, oil, IMF, International Monetary Fund, United States, Canada, Mexico, South Africa, Ghana, Australia, Venezuela, Peru, Indonesia, Bolivia, New Zealand, Gold Summit Corporation, ABX, Barrick Gold Corp., AEM, Agnico-Eagle Mines Ltd., AU, Anglogold Ashanti Ltd., AUY, Yamana Gold Inc., BVN, Compania de Minas Buenaventura SA, CDE, Coeur dAlene Mines Corp., EGO, Eldorado Gold Corp., FCX, Freeport-McMoran Copper & Gold Inc., GFI, Gold Fields Ltd., GG, Goldcorp Inc., GOLD, Randgold Resources Ltd., GRS, Gammon Lake Resources Inc., GRZ, Gold Reserve Inc., GSS, Golden Star Resources Ltd., HMY, Harmony Gold Mining Co. Ltd., IAG, Iamgold Corp., KGC, Kinross Gold Corp., KRY, Crystallex Intl. Corp., MDG, Meridian Gold Inc., MNG, Miramar Mining Corp., NEM, Newmount Mining Corp., NXG, Northgate Minerals Corp., TCK, Teck Cominco Ltd., covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options [/tags]