TRIM - The chart below is marked up to show the rebalancing points I suggested in the previous note.  In particular, when in the upper half of a likely rally range (loosely defined by previous long-term support / resistance and typical rally magnitude), moving 10% to 1x physical gold or fiat at each 10% marginal increase in the index would get one to the 60% long stock / 40% fiat levels we suggested would be necessary to avoid almost all negative effects of a drawdown.  I marked those points with the green arrows and approximate dates on the upper left. 

TRAIL - At the same time, one would "trail" by rolling up, and perhaps out in date, on the OTM long puts.  The most overbought and opportune times to do the t & t , of course, do not always correspond to exactly 10%, so one may have to bite the bullet and do another move than one would like to keep protective puts nice and tight for the inevitable sharp pullbacks.  I think I moved 4 times and had over 5 points invested in the long puts in portfolio so far.  However, the long puts currently in play (May 28) are at about 4 points in value.  Moreover, we are able to use the sharp pullbacks to our advantage and sell shorter dated put spreads to recover this protective put cost (legging into diagonal - indicated by shaded green box areas).  I'm pretty sure we're net profitable on them to this point.

For instance, I don't show it on this chart (it is a bit idealized, showing moves of 10%), but I believe we had moved the puts to the 26 level on the first move up to 28 (1/6/15 or 1/12/15 for sure).  The  first several sharp moves back to 26 gave great opportunities to sell the Feb 25 / 20 bull put spread, for about 1 point.  Using live stop loss orders of 10% would have knocked out long positions on 1/14/15 and 1/26/15.  The rinsedown on 1/8/15 was also about 8%. 

Using protective puts actually adds value on those pullbacks and gives one a relatively conservative "buying" opportunity by selling the short put spreads below the now near or in the money long puts.  Note, at those points the index was trading at or above the 20 dma, with strong buying in place.  That is not the case currently, with all the earnings gapdowns and short-term ma's negatively aligned.  To me, we actually crossed a significant inflection point mid-day Thursday, with very bearish short-term implications unless we take back that area with a higher low (SBGL chart below).

SELLING WEEKLY CALL SPREADS AND USING OTHER BEARISH OPTION VEHICLES

These decisions are a bit trickier, but we can study the historical data to see how far away from certain moving averages (9dma, for instance) the index tends to get at its most overbought points.   Looking over the last few years, it appears the GDX is at an extreme at around 10% above the 9dma, and the GDXJ would run about 13%.  Typically, waiting that long wouldn't trigger many trades, but using 1/2 positions would allow for a profitable scale-in at, say, starting at 5-7% above the 9dma for the GDX.  Should both those positions go to max loss, then a more bearish trade such as the costless collar or ITM put would be favorable, along with higher levels of profit-taking.

GDXJ 2015 Model Portfolio 9-week review - 

1) Initial stock selection was pretty good, with the 50% allotted to GDXJ type stocks mostly well-outperforming.

2) The initial mix was lower beta (some royalty stocks and 2x ETF) than the GDXJ since it was all plopped in at once.  Thus it underperformed overall for a few weeks.

3) The subsequent decisions to roll to higher beta did not work as those stocks have been mixed and mostly sagging lower in the past month.

4) Cash levels were  too low to avoid the current drawdown of about 10% (24% max increase to current 14%).  In part, we were looking for a longer-term run into the March or May FOMC meetings, typical time frames for peaks  in many years.  This may still happen, but, hey, if you're a bankster, why go to 33 on the GDXJ from 30 when you can go through 25 first.

5) Some weekly options plays were put on too aggressively, negating our ability to fully capitalize on the sharp pullbacks.

6) Using seasonality (pre-Santa Claus rally) to start with a fully long, yet largely hedged portfolio was key.  It would be very easy to be losing money on pm stocks this year if one had waited to chase it after waking up from a New Year debauch, etc.