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Betting big on $1,000 gold in September
Wednesday, July 16, 2008
Have a look at the open interest in September $100 call options for the SPDR Gold Shares ETF (NYSEArca:GLD). Open interest at this strike price for other months is a little high, but nothing like September where it is more than 10-to-1 versus any other price.
Options for the world's most popular gold ETF began trading just one month ago and, according to the Chicago Board Options Exchange, they were the most actively traded call options last week.Full Disclosure: Long GLD at time of writing.
To learn more about investing in natural resources using commonly traded ETFs, stocks, and mutual funds, see this description at Iacono Research. Or, sign up for a free trial.
3 comments:
So the CPI (which is a complete hedonically adjusted joke) is up 5% y/y and 13.2 if you annualize June's reading and gold and other inflation hedges selloff. On top of that banks have a massive rally. WTF is going on? If you read and listen to the recent quarterly releases and CC's the inflation in prices is just getting started for the consumer as companies finally are passing the price increase on.
I agree with the last post. Inflation is breaking out of its box and we are finally starting to see the producers pass along the costs. Gold should be flying off the handle! I'm invested in gold and am shocked and in awe just like everyone else.
Well in a weird way, gold is breaking out to the upside. Hear me out.
Obviously the correlation between Oil and Gold is somewhat strong because of both of their inflationary and negative-correlation to the USD. So this sell off in the energy markets, namely Oil, is taking gold down with it. I am confident this will only be momentarily. What makes me optimistic about my gold futures and ETF's is the relative strength between the two commodities. I'm not sure how many people follow the Gold to Oil ratio, but it has been performing terribly lately. Oil is up 200% since Jan 07, while gold is up a meager 48%.
Yes my friends, lets take a look at the Gold to Oil ratio. This is the nicest chart Ive seen in Years!!! Ive looked back on the charts for over 25 years and never have I seen the ratio this low. The good news is the ratio is breaking out to the upside (bullish gold), and doing so frivolously. Its breaking out like the plot of every single episode from the Fox-Flop TV series Prison Break.
Check it out for yourselves ladies and gentlemen.
http://stockcharts.com/h-sc/ui?s=$Gold:$WTIC&p=D&b=3&g=0&id=p41261564129
Gold-Oil ratio up 14.8% in the past 4 days! That is what I call “relative strength”
Be patient my friends; fortune seeks the patient.
Very good post, I see all these off topic comments.
The point here is, there is a huge bet of gold going over $1000 in Sep.
The question is, how can we profits from it.
Tim, are you buying those same call options as well.
When there is a buyer, there is a seller. My concerns is, wouldn't the seller be concerned, (that there will lost around $150 millions when gold is over 1000 for spot delivery).
Don't you think the seller will do all that he can, i.e. to prevent gold from going over $1000.
The most likely scenario that a super spike in gold is some thing extra ordinary like Israel strike Iran, but since Israel F-15 needs to first fly over Iraq before it can reach Iran, most people think that cannot happen (unless the US permits) it.
Do you have any reason, theory to believe that a super gold spike can occurs (w/o those extra ordinary events)
Given that oil has corrected some much, gold tried to rally over 1000 and failed (it actually failed 3 times during last 3 weeks), many speculation are some big central banks players are behind it (prevent gold are going higher)
Care to share anything ?
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