2/22/22 Trade Event Update

Nov 7, 2021

2/22/22 Trade Event Update

Critical information to follow this week...

Our 2/22/22 Trade Event has generated tremendous interest and we want to personally thank you for following the trade. We are officially 14 days into our Trading event with 73 trading days remaining until February 22nd, 2022.

We remind you that you can follow the daily movement of the trade here.

We believe that we are in the early stages of a long term precious metals bull market which began in August of 2018. Since that time gold prices have risen 52% (up from $1194), silver prices are up 60% (up from $15.16) and platinum prices are up 29% (up from $801). Long term trends couldn’t be more bullish as we see it and we believed that we are still very very early for what will be many years long bull market. We remain confident in our long term price targets of $5000 per ounce for gold and $100 per ounce for silver by the end of 2025.

Of course nothing moves in a straight line and why event trading tied to a shorter time frame carries significantly higher risk and reward.

Early returns for the 2/22/22 trade have thus far been solid, up a positive 17.62% after only 14 trading days. While these early returns suggest that we are on the right track, tonight’s note is to update followers on three key components; momentum, the critical achievements in the timeline, and important events to pay attention to in the coming week.

Gold and silver options account for 63% of the trade positioning. We have also included hedges within the event trade portfolio that benefit from rising rates and suffer should longer term yields drop. As to be expected, as higher yields pressured gold and silver prices heading into the FOMC meeting. In the days before the Fed meeting our positions in TMV and DPST rose in value while gold and silver prices fell. As yields on the 10 YR Treasury dropped from 1.6% to 1.45% to close out Friday we witnessed major pressure on these two positions in particular.

Since the trade was announced we have witnessed TMV down about 47% and DPST down about 43%. IMPUY, a position we hold in the long term portfolio was down 15%. These losing positions were more than offset with gold options that closed Friday up nearly 50%, silver options up roughly 20%. CCJ and EQX and GDXJ are just about even.

The highest conviction positions of the trade are that gold and silver prices will be at all-time highs within the next 100 days. While our positions in DPST and TMV offer a hedge to rates that rise. In a perfect world our gold and silver call occurs in unison with rising rates and our hedge becomes a winner as well.. This is the perfect world for our trade.

#1 Momentum:

The most important force in any shorter dated event trade is momentum. Our 2/22/22 positions are aggressive, take advantage of leverage, and are best positioned with early moves in our direction. The biggest headwind facing the trade has always been the Federal Reserve and the first FOMC meeting which was held this past Wednesday.

Not surprisingly, gold prices dropped heading into the meeting. When we published the trade gold prices were $1780 per ounce. Through Wednesday as Jerome Powell took to the stage to discuss forward policy, gold prices sank to lows of $1759. Global central banks have been tightening their interest rate policies and the Federal Reserve has begun to taper. Gold prices are the easy short in this environment. Silver was also hammered down from $24.60 to $23.54 Heading into the FOMC meeting the short positioning in gold and silver was extreme.

However, as Jerome Powell spoke and the market began to realize that despite an official announcement of tapering the Fed was remaining intentionally dovish, gold and silver prices began to surge higher. Silver actually closed the Wednesday in the green, and gold, which at one time was down nearly 2% ended the day down only 0.5%.

We have always taught our subscribers that the most important day for short term momentum is what happens heading into the close on Friday after the Fed meeting.

What’s important to note is that gold and silver prices closed out the week with serious momentum. In under 15 hours of trading after Powell spoke, gold prices surged $60 from $1759 to close out Friday at $1819. Silver rose to $24.18. They each closed the week at their daily highs, indicating a positive continuation is likely into the coming week.

The critical price levels to watch in the coming week are $1834 for gold and $24.40 for silver. These are technical resistance levels that until breached with force could still repel prices for gold and silver lower. We expect the opposite to occur in the coming week and that gold and silver prices could strongly break above these technical levels.

Critical Achievements

#1 – Federal Reserve Meeting (11/03): The premise of our entire trade is that the Federal Reserve will remain behind the inflation curve, continue to promote that inflation is transitory, and will promise vigilance and take no action on inflation until it’s too late. The most important early event for our trade was no doubt the actions of the Federal Reserve in their November meeting. We witnessed this first hand heading into the meeting as markets had been pricing in a tighter Federal Reserve. We disagreed, and posited that despite their taper, the Fed would remain incredibly loose.

Our prediction thus far could not have been more spot on. Despite the tightening of other central banks around the world, and the expectations from Goldman Sachs and other investment banks that the Fed will need to begin raising rates in mid-2022, we continue to predict a Fed that is all talk and no action (at least until the massive infrastructure and social spending bills make their way through Congress).

Powell did not disappoint us. Not only did the Fed not indicate when they may be considering raising interest rates, Powell continued to reiterate that inflation is transitory, and that ongoing tapering is not a guarantee and will be cellpadding="0" cellspacing="0" width="100%">