I'm long Ventana Gold Corp. (VEN.TO), a junior gold mining company. Here's a look at gold (Figure 1) and the junior gold mining company index (GDXJ, Figure 2).
[caption id="" align="aligncenter" width="570" caption="Gold"][/caption] [caption id="" align="aligncenter" width="570" caption="Market Vectors Junior Gold Miners ETF (GDXJ)"]1[/caption]
Both figures are from Finviz.
The reason why I picked VEN in particular is related to this article in June. Ventana Gold raises \$20 million in private placement. Silver Wheaton (SLW) paid \$20 million for shares priced at \$11.11 per share back in June. SLW is a well managed company in the precious metal industry. I've traded it before and it has always been on my radar to buy.
VEN has been taking a heavy beating in the past few weeks since SLW's investment as shown in Figure 3.
[caption id="" align="aligncenter" width="570" caption="Ventana Gold Corp. (VEN.TO)"]2[/caption]
\$6.80 is the 50% retracement level to that recent rally (the first since the dive beginning in June). It seems to be holding well today despite market weakness.
Furthermore, EUR/USD rocketed upward and is trading around 1.29. This isn't something to be ignored.
So I'm taking a small bet here at \$6.93. Stop loss order is opened at \$6.40. My risk is thus, (\$6.93 - \$6.40) * 250 = \$132.50 + \$9.90 commission = \$142.40 = 1.5% of account.