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The Deliberate Trader

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  • GTX Inc.: The Company's Next Moves [View article]
    Sell the August 5.00 put for 1.00.

    If the shares are assigned, you'll own them at 4.00 per share.

    If the options expire worthless in 60 days, you'll have a 120 per cent annualized return.

    If we make a buck it's sheer luck.
    Jun 16, 2013. 10:07 PM | 2 Likes Like |Link to Comment
  • Gold And Silver Royalty Companies Part 5: Smaller Royalty Companies [View article]
    Ben, can you address some questions about the risk of owning the streamers? You keep saying that the risk is lower than owning "mining shares". Diversification among many projects as a way to reduce risk is easy to understand.

    However, beyond that, isn't the risk of owning a streaming contract the same risk as owning the shares of the miner that produces the stream? Stated otherwise, you say above that the streamer gets the resource produced "while the mining company operates the mine."

    What happens if the miner stops the mining operation? In the legal sense, what "security" is afforded in the streaming contract to protect the streamer in the even the miner goes bankrupt? What if the local sovereign halts production for whatever reason? Safety? Taxation? Nationalization?

    Does it vary from contract to contract? If it does, doesn't the quality of the streamer depend not only upon the cumulative value of the resources, but also upon the viability of the outfit on the other side of the deal, and the quality of the protection against a busted contract obtained by the streamer's negotiating team?

    Aside from diversification, the risks may be greater than the typical investor may initially realize, particularly in times of stress within the mining industry. And since it is apparent that with the recent popularity of streamers, investors often pay a premium for the shares, could it be that any real benefit to owning them may be something of an illusion?
    May 3, 2013. 03:21 PM | Likes Like |Link to Comment
  • Copper Miners: Crisis An Opportunity? [View article]
    Copper is every bit as interesting as gold or silver. Commercial copper traders agree.....copper will likely soon make a relatively sustained advance. There may be a washout; but that will likely mean that the advance will be even more robust.

    Compare the net long commercial COT copper position of today with that in January 2007 and October - December 2008.

    Commercial traders are usually not wrong; and in copper, they are usually not this long.
    May 3, 2013. 11:42 AM | Likes Like |Link to Comment
  • Capstone Mining: A Profitable, Cash Rich Copper Producer Trading Below Book Value [View article]
    Capstone could easily drop to 1.50 or lower; and we like the odds that it will. Note that we said "odds" and investing is about probability. Market participants tend to over react at extremes of fear and greed.

    Much depends upon the price of copper in the next several weeks or months; and it is presently at an inflection point. Seasonally, copper may tail off for a few weeks before rallying in mid-June. However, seasonal tendencies do not always predominate; and the past six months is evidence of that. Here is a seasonal chart for copper futures:

    While the continuous copper futures chart is at support, it is not at historic lows. In fact, if it breaks below 2.75 - 3.00 it could be in a world of hurt.

    However, we also watch the commercial COT activity. Presently, the commercial net long position is at historic highs; and it will be interesting to see what this week's report shows.

    Similar levels in the COT commercial net long positions were approached (but not met) in January 2007 and October - December 2008. If you look at what happened to the price of FCX and CSFFF in the weeks and months after those periods, you can easily see how important it can be to follow the lead of commercial traders.

    CSFFF is up more than 10% since the beginning of the week; however, we'd like to see a close above 2.50 before our comfort level is elevated that it won't see 1.50 within the next several weeks.

    Good luck with it.
    May 3, 2013. 11:31 AM | Likes Like |Link to Comment
  • Buy Freeport-McMoRan Now And Pray For A Repeat [View article]
    You could learn how to trade options and do this:

    ..... or this:

    or several other strategies. Good luck with it.
    May 3, 2013. 07:17 AM | Likes Like |Link to Comment
  • Capstone Mining: A Profitable, Cash Rich Copper Producer Trading Below Book Value [View article]
    Interesting exercise :

    Compare the price charts of FCX and CSFFF.PK.

    More than a year ago we thought we might be able to buy Capstone for 2.00 to 1.50 within two years.

    We like 1.50 even better now.

    Patience pays.
    May 2, 2013. 05:21 AM | Likes Like |Link to Comment
  • Buy Freeport-McMoRan Now And Pray For A Repeat [View article]
    If you're interested in copper try comparing the charts of FCX and CSFFF.PK.

    The former has lost 36 per cent of its market cap in the past year, while the latter has lost 38 per cent over the same period. The correlation between the price action of the two companies is remarkable.

    Capstone just bought a mine from BHP and will still have cash left after the deal closes.

    Fundamentals support an investment in Capstone...

    ..... but perhaps not just yet. (We think that patience works better than prayer.) We continue to think that you can buy Capstone at 1.50 over the next year...... and if the charts are any indication, you'll be able to buy FCX at about 20.00 during the same time.
    May 2, 2013. 04:48 AM | 1 Like Like |Link to Comment
  • Freeport McMoRan's Outlook Lifted By 3 Events [View article]
    So in 10 days these "events" have taken FCX from a security for "speculators" only, to..... what?

    You "may" initiate a position within 72 hours? Somehow this article isn't the recommendation readers "may" be looking for after your last FCX article. You "may" want to consider giving FCX a rest.
    Apr 29, 2013. 02:39 AM | Likes Like |Link to Comment
  • Which Stock Would You Rather Own? [View article]
    Apr 28, 2013. 08:14 AM | 1 Like Like |Link to Comment
  • Philippines Described As A Rising Star By Moody's, Growth Forecast Raised By S&P [View article]
    You certainly didn't answer the question, but that's OK..... it was rhetorical.

    The Philippines (not the Filipino people) "chose" what big brother was willing to facilitate in return for continuing to provide cheap resources, dirt cheap real estate for unimpeded military use and subsistence wage labor.

    Of course, what the Philippines got was "democracy" in name only, something that the plutocrats could have easily remedied but "chose" not to, as it was not in the best interest of thievery..... er, capitalism.
    Apr 27, 2013. 10:49 PM | Likes Like |Link to Comment
  • Philippines Described As A Rising Star By Moody's, Growth Forecast Raised By S&P [View article]
    The challenges are systemic and socio-culturally ingrained. There is no other explanation for how such a brutal enemy, so utterly squashed in defeat, could rise from the radioactive ashes to world prominence, while the chief Asian ally, whose right it was to share in the victory, continues to toil in the third world.

    Will the Filipino people now participate in their country's projected economic growth and prosperity parallel to a world in which the "haves" grow fewer and the "have nots" grow inexorably larger in the name of capitalism??

    We'll believe it when we see it. Thankfully, hope springs eternal in the hearts of the Filipino people; and that is something no one can ever take away.

    Best wishes to the Filipino people.
    Apr 27, 2013. 09:55 PM | 1 Like Like |Link to Comment
  • Precious Metal Miners Are For Trading: Add Some On Dips [View article]
    Solid article.

    A good (better, best) way to do this with lower risk is sell near term cash secured puts into weakness. Do this in connection with the initiation of partial long positions and you give yourself a margin of error. As the price declines to re-test recent lows, sell ATM June puts and scale into your favorite miners.

    For example (but not necessarily by way of recommendation), buy shares of SSRI with one quarter position at or near 7.00. With another quarter position, sell SSRI 7.00 June puts for .75.

    If the market sells off again, by mid-June you'll be holding a half position in SSRI at about 6.63 (one cent above the recent low close). Should SSRI close below that number, you will want to re-evaluate and perhaps repeat with the other half position at the August 6.00 or even 5.00 strike, depending upon price at the time. Short term put options are used to limit the exposure of capital.

    If the options in the example expire, it means that SSRI will be above 7.00 in mid-June and you will be holding one quarter position at 6.25. What could be so bad? You can do this both on the way down and on the way up if you are nimble and vigilant.

    Successful securities trading is more than buying the right company at the right time. You have to be able to use different techniques in various environments; and you also have to be able to manage positions.

    Good luck to those who presently want to trade the is probably a lower risk environment for it (as long as you don't pick companies that may go broke or become nationalized) than at any time since November 2008.
    Apr 27, 2013. 12:28 PM | 1 Like Like |Link to Comment
  • Precious Metals: Massive Paper Selling Begets Unprecedented Physical Buying [View article]
    So it's time for you to turn and run.

    ...somehow that fits.
    Apr 26, 2013. 02:47 PM | Likes Like |Link to Comment
  • Precious Metals: Massive Paper Selling Begets Unprecedented Physical Buying [View article]
    "It did happen once with ONE bank, I believe if it happened with many more banks you will see a different response."

    You really want us to take that seriously?

    "Spin us who own physical into one train of thought."

    We own physical metal, so for those of you who have "one train of thought", speak for yourself.
    Apr 26, 2013. 02:26 PM | Likes Like |Link to Comment
  • Gold And Silver Dead Cat Bounce And More Carnage To Come Or All In? [View article]
    Where can you buy real silver for less than $25?
    Apr 26, 2013. 02:02 PM | Likes Like |Link to Comment