Oil is at $101 this morning . So we'll all be paying for Putin's war at the pumps. Fortunately, as we discussed in yesterday morning's PSW Report ( which you can subscribe to HERE ), we hedged that by being long on Silver ( /SI ) and Natural Gas ( /NG ) and our 2 Silver contracts are up $6,750 and our Natural Gas contracts are still at $4.50 – so still good for a new trade as the Ukraine offensive continues . $2,450 is our stop on /SI Futures, as we want to lock in a $5,000 gain but we'll let it run otherwise. Another hedge we really like is Barrick Gold (GOLD), the world's largest miner, who have 69M ounces of gold reserves at an average extraction cost of $1,200 per ounce and, as a bonus, they also have 12Bn pounds of copper, which is currently trading at $4.50/pound though Barrick only has them booked at $2.75 so there's a bonus $2.1Bn in the copper reserves and, at $1,900, the gold exraction profits would be $48.3Bn. As it stands, at $22.50, you can buy the whole company for $40.2Bn and they drop a solid $2Bn a year to the bottom line. What's really fun about GOLD, however, is that if Gold ( /GC ) just goes up 20%, to $2,100 – GOLD makes $200 more per ounce on roughly 5M ounces mined so that would be a 50% bump in earnings – performing better than the metal itself. If Gold drops 20%, to $1,700 – GOLD still makes $500/ounce while holders of the metal simply lose their bet. Even better, we can play GOLD with options to give ourselves an even greater advantage. GOLD was our 2019 Trade of the Year from when it was only $13 around Thankgiving of 2018 but, as a new trade, you can: Sell 10 GOLD 2024 $20 puts for $2.90 ($2,900) Buy 25 GOLD 2024 $20 calls for $5.40 ($13,500) Sell 25 GOLD 2024 $27 calls for $3 ($7,500) That's net $3,100 on the $17,500 spread so you have $14,400 (464%) of upside potential at $27and you are obligated to buy 1,000 shares of GOLD for $20,000 if it heads lower and, if …
Oil is at $101 this morning.
So we'll all be paying for Putin's war at the pumps. Fortunately, as we discussed in yesterday morning's PSW Report (which you can subscribe to HERE), we hedged that by being long on Silver (/SI) and Natural Gas (/NG) and our 2 Silver contracts are up $6,750 and our Natural Gas contracts are still at $4.50 – so still good for a new trade as the Ukraine offensive continues.
$2,450 is our stop on /SI Futures, as we want to lock in a $5,000 gain but we'll let it run otherwise. Another hedge we really like is Barrick Gold (GOLD), the world's largest miner, who have 69M ounces of gold reserves at an average extraction cost of $1,200 per ounce and, as a bonus, they also have 12Bn pounds of copper, which is currently trading at $4.50/pound though Barrick only has them booked at $2.75 so there's a bonus $2.1Bn in the copper reserves and, at $1,900, the gold exraction profits would be $48.3Bn.
As it stands, at $22.50, you can buy the whole company for $40.2Bn and they drop a solid $2Bn a year to the bottom line. What's really fun about GOLD, however, is that if Gold (/GC) just goes up 20%, to $2,100 – GOLD makes $200 more per ounce on roughly 5M ounces mined so that would be a 50% bump in earnings – performing better than the metal itself. If Gold drops 20%, to $1,700 – GOLD still makes $500/ounce while holders of the metal simply lose their bet.
Even better, we can play GOLD with options to give ourselves an even greater advantage. GOLD was our 2019 Trade of the Year from when it was only $13 around Thankgiving of 2018 but, as a new trade, you can:
- Sell 10 GOLD 2024 $20 puts for $2.90 ($2,900)
- Buy 25 GOLD 2024 $20 calls for $5.40 ($13,500)
- Sell 25 GOLD 2024 $27 calls for $3 ($7,500)
That's net $3,100 on the $17,500 spread so you have $14,400 (464%) of upside potential at $27and you are obligated to buy 1,000 shares of GOLD for $20,000 if it heads lower and, if
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