Too early for mining? Not for me.

We saw a decent rally in uranium miners this week. I sold some out of the money covered calls on a couple of my positions and used the proceeds to buy more SBSW.

The big Fed meeting is coming next week and everyone expects a 75bps hike with an outside shot at 100. Expectations are for a big market drop, as institutional investors have unusually big short positions in place. While that could easily happen, I don’t like bets that seem crowded.

I’m still absolutely amazed at how cheap mining shares have become. I have no illusions that they won’t get cheaper, but I’m not selling into weakness here. With out of the money covered calls though, you can take some money off the table while still booking a gain if the shares run up and get called. It seems too early for a sustainable rally so I like selling these if the price is right.

One thing I’m still confident on is that we need a lot more investment in natural resources in order to sustain any real economic growth, and that the relatively small mining sector is set to soar when this investment starts coming in. Without this investment, the CPI will shoot up and destroy any attempt at economic recovery, so I really think it’s the best sector to be in and I don’t mind being early here.

That’s all for now, good luck and happy trading. Here’s where my positions ended up.

  • HEDGES (16.2%)
    • 16.2% TLT Calls
    • 3.7% AG
    • 3.8% MTA
    • 3.7% SILV
    • 2.7% LGDTF
    • 2.8% EQX
    • 2.7% SLVRF
    • 2.3% SAND
    • 1.8% MGMLF
    • 1.8% SSVFF
    • 1.7% RSNVF
    • 1.7% BKRRF
    • 1.3% HAMRF
    • 1.9% MMNGF
    • 1.1% DSVSF
  • URANIUM (23.9%)
    • 4.5% CCJ (covered calls)
    • 3.4% DNN shares & calls
    • 3.2% UEC
    • 3.0% UUUU
    • 3.2% BQSSF
    • 2.8% UROY
    • 1.8% ENCUF
    • 2.1% LTBR (covered calls)
  • US CANNABIS (15.8%)
    • 2.0% AYRWF
    • 1.8% CCHWF
    • 1.7% CRLBF
    • 2.6% CURLF
    • 1.8% GTBIF
    • 2.3% TCNNF
    • 1.3% TRSSF
    • 2.3% VRNOF
  • BATTERY METALS (10.7%)
    • 4.5% NOVRF
    • 4.5% SBSW
    • 1.7% PGEZF
  • CRYPTO (2.5%)
    • 2.5% XRP
  • OTHER (3.1%)
    • 2.4% DOCN (w/ covered calls)
    • 0.6% OGZPY
    • 0.1% TWTR call
    • 0.0% ATCO calls
  • CASH (-5.1%)

About johnonstocks

I've been trading stocks since 2003, active on Motley Fool's discussion boards and using first Hidden Gems, then Global Gains. I no longer have the newsletters, but I keep up on the WSJ and read David Rosenberg everyday at Education: CFA level 2 candidate MBA-focus in Finance, Marshall, University of Southern California - expected Dec 2010. BS Mechanical Engineering, UC San Diego, June 2002
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