Thursday Already? February Already?

This week (and this year) have been flying by, haven’t they? 

I guess the Trump chaos is part of it – something new every day. Yesterday it was taking over Gaza and turning it into beachfront property and today it’s tariffing Temu, Shein and other Retailers an additional 30%, removing the “under $800” exemption but, functionally – how is customs going to check and tax EVERYTHING coming from China? The Dollar Store is already the $1.25 store and now it will be the $1.625 store (catchy!) and THIS is how Trump plans to not cause inflation?  

Last year, companies including Shein and Temu shipped some $46 billion of small parcels to the US that had a declared value of less than $800, according to estimates from Nomura Holdings Inc. That represented about 11% of all US-reported imports from China.

Chinese vendors also say that any suspension of packages would significantly harm their business, potentially resulting in closures of factories that are already running on sliver-thin margins.

Anyway, enough Trump antics – I’m sure there will be more tomorrow. The Futures are kind of flat this morning and the S&P is still up 2.7% for the year and the Dow is up 4.7% with the Nasdaq lagging, for a change, at just 1.6%. More interesting is that the Magnificent 7’s contribution to 2025’s gains has dropped to 23% – from 60% in 2024.  

8:30 Update: Q4 Productivity is up 1.2% but that’s down from 2.3% in Q3 and, unfortunately, Unit Labor Costs are up 3% and that is from 0.5% in Q3 and that means Wage Inflation is back and that’s not a good sign and, so far, AI is not saving us on the Productivity side. Obviously, this is very bad for Corporate Margins.  

Gold tested $2,900 yesterday – still on it’s way to $3,000 and Barrick Gold (GOLD) Traders are finally starting to catch on to concept that Barrick sells Gold (/GC) and that means they will make MORE MONEY! Yes, I know, it’s all so complicated – who could have predicted that (besides us)?  

Gold (/GC) is up $300 (11.5%) since mid-December and Barrick (GOLD) is up 14.33% because their extraction costs are essentially fixed so higher gold prices drop almost straight to profits for them and Q1 is off to a very good start. Barrick reports earnings next week (12th) and we’ll see how the guidance looks but I think they are pushing down towards just 10x forward earnings – so still a great deal at $17.  

It’s been almost a year since GOLD was our Feb 7th, 2024 Top Trade Alert and it was $15 at the time and since has been added to most of our Member Portfolios. The trade idea at the time for our Members was:  

• • • • Sell 10 GOLD 2026 $17 puts for $3.50 ($3,500)
      • Buy 20 GOLD 2026 $13 calls for $3.80 ($7,600)
      • Sell 20 GOLD 2026 $17 calls for $2.10 ($4,200)

That’s a net $100 credit on the $8,000 spread so there’s $8,100 (8,100%) upside potential at $17 in two years. Worst case is you own 1,000 shares at $17 but if that were the case today – we could sell 2026 $15 calls for $2.80 and $13 puts for $1.45 and that would drop our net to $12.75 and I certainly don’t consider that a bad worst case – and that’s without even rolling the short puts lower!

We’re halfway home on this spread and already crossing our goal and the short $17 puts are down to $1.90 ($1,900) and the $13 ($4.90)/17 ($2.45) bull call spread is net $2.45 ($4,900) for net net $3,000, which is already up $3,100 (3,100%) in 12 months and we still have $4,900 (158%) left to gain if GOLD can simply hold $17 into next January. That’s right, our PSW leftovers are still fantastic as new trades for ordinary investors!

We’re doing a bit of bargain-hunting in our Live Member Chat Room today – following up on the trade ideas we identified in yesterday’s Live Trading Webinar – I’ll see you inside. 

• Phil