Friday, February 11, 2011

Mid-Day Update - 2/11 (12:15pm)

Mubarak's Resignation and Impact on Gold

Mubarak's sudden resignation has put a lot of uncertainty into the gold market. The initial move has been to push the USD higher and push oil and gold lower. Whether or not I agree with the initial reaction, the price action has turned the technicals lower and I must respect that.

I had been watching the 100dma in GLD for the last several days. Up until about an hour ago things were looking promising. But the post-Mubarak reaction has put in what looks like a topping formation in the daily chart. A close at current levels could see an accelerated move to the downside now.

I sold 1/2 my ABX to reduce risk as soon as I heard the news of the resignation. I then used the initial reaction low in GLD @ 132.67 as my stop on both my HBU.TO and my remaining ABX position. I ended up selling ABX @ 48.04 and 47.77 for a net small profit, and HNU.TO @ 31.40 and 31.34 for a net small profit as well. I also sold my PKL.TO @ .83 for a .01 gain. I am now flat all things gold.

The uncertainly and risk involved, especially ahead of a weekend, does not merit a position in gold in either direction at the moment. If the price of gold snaps back and rallies this afternoon or on Monday I can always look to get back in - but I'm not willing to place a bet at the moment.

One trade I did initiate on today's news was to buy MEOH @ 28.90. Methanex is a global leader in methanol, and had been performing well for the last few months, Its operations in Egypt have caused the share price to take a hit this month. I think there's a decent chance we could see this one start to post gains again now that some of the uncertainty in Egypt is over.

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