My personal portfolio
Comment of the Day

March 12 2012

Commentary by David Fuller

My personal portfolio

Treading water - some recent trades in precious metals and stock markets

David Fuller's view Most of these occurred last week while I was on a rest break. This is probably not the most auspicious time for trading with stock markets and commodities in a consolidation phase following earlier strong gains. Nevertheless, with most stock markets having confirmed our yearend outlook for a cyclical bull trend, and some commodities performing in line with equities, I decided to participate in the recent short-term oversold condition in precious metals following pullbacks for gold and silver.

On Wednesday 7th March, I bought April gold at $1684.3 and on Thursday the 8th I bought May silver at $33.643. I also bought June Nikkei at 9837.5 last Thursday. Favouring money control over adventure, I placed slightly in-the-money stops as these trades firmed. The gold and silver longs were triggered on Friday the 9th at $1686 and $33.67, respectively, when the USD strengthened on positive economic news. Feeling that this news was likely to be favourable for precious metals following their initial reaction, given the recent correlation with equities, I bought back May silver and then April gold last Friday at the slightly better prices of $33.493 and $1685.2. Prices above include all spread-bet dealing costs and my gold and silver longs are conservatively protected with slightly in-the-money stops in what remains a ranging market environment. Consequently, I may consider taking short-term profits, when available, rather than just placing breakeven stops and seeing if the recovery continues sooner rather than later. I should have done this on Friday evening as this afternoon's pullback triggered my latest silver stop at $33.543 against the purchase price at $33.493 above. Here are today's charts for gold (weekly & daily), silver (weekly & daily) and the Nikkei (weekly & daily).

Last Friday I also increased my Japan exposure in line with Fullermoney's long-standing view that a BoJ move to weaken the yen, which was long overdue, would boost the stock market by increasing the outlook for export earnings. I opened a long position in the sterling-denominated Schroder Japan Growth IT (SJG LN) (weekly & daily) which currently trades at a discount to NAV of 11%. I paid 97.52p for a June contract and may add to this position in the event of a pullback. In a step too far on Friday, I also doubled my Nikkei position paying 10,002.5 for another June position. I was hoping that it would break above the psychological 10,000 today. It did, briefly this morning, before falling back and closing slightly lower on the day. That setback also triggered my slightly in-the-money stop at 9850 on my 8th March June Nikkei purchase at 9837.5. I will look for further buying opportunities in this depressed market which is now a genuine recovery candidate.

Lastly, I closed my trading long in Asian Citrus Holdings (ACHL LN) (weekly & daily) this morning. It has done well but the spread-bet dealing costs for this AIM-listed share are too high at over 3% each way. I sold my June ACHL position at 47.07p against my purchase at 41.47p on 9th February. Due to its additional recovery prospects, I am holding onto the ACHL purchased as a medium-term investment in my personal long-term investment portfolio on 2nd February.

Prices above include all spread-bet dealing costs.

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