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Unusual Pattern of the Day: Yamana Gold (AUY)

Unusual Pattern of the Day: Yamana Gold (AUY)

Gold prices have slid under $1,800 for the first time in months, and gold mining stocks are feeling the pressure. A number of gold mining stocks have been giving off warning signs lately. One such company is Yamana Gold (AUY).

The explorer and producer of the metal has seen shares slide over 20 percent since the start of the year. Even worse, however, shares have recently seen a death cross, with the 50-day moving average dropping under the 200-day moving average.

Even with the recent decline, shares have still beaten the overall market over the past year. However, the shifting trend indicates that shares may now underperform the stock market in the months ahead.

Action to take: The July 2021 $4.50 put option trades for about $0.60. That’s an inexpensive bet on gold prices continuing to trend down. The trend will likely shift back before then on monetary concerns. As long as the downtrend is in place, however, this is an inexpensive way to benefit from falling gold prices.

Traders should look for oversold conditions or a monetary announcement likely to move gold prices higher as a sign to take profits. Traders may even want to catch the other side of the swing and go long gold prices.