Thank you Wags. I'll look hard at that. Been short 700 puts and long 900 calls for the past 3 or more months. I haven't made a trade this year.
I agree with the earlier poster who said there probably hasn't been a better fundamental reason for being long in 100 years. It's not just because of implied inflation-that's a guess after all-but because ST rates are so low there's no penalty for carrying a non interest bearing investment.
Granted I'm not long because of fundamentals-I know as little about women's figure skating as I do metals-but I bought gold because sentiment sucked at $700 and because gold remained semi-buoyant against most everything else on a relative basis.
I'll give a few devils advocate reasons why I'm long.
1. While crude lost 80% of it's value and silver 60% in one of the biggest forced deleveraging periods in market history-gold held tight with a token 30% break. IMO if gold wanted to break wide open it already had it's chance.
2. Gold has continued to rally on dollar strength-quite counter intuitive to it's pattern throughout most of the decade. When relationships decouple I don't expect mean reversion-I expect pain for those who stubbornly cling to relative valuation dogma.
3. I'm cognizant that even if gold is macro bullish it could still fail at $1000 a few times. We could be establishing a trading range top that will need additional bullish information before it's penetrated.
I wish I were smart enough to know when a swing high is formed-I'd be King Midas-but the easiest way to stay with it is the way I'm positioned-via a naked collar. (is there another name for this short put, long call strat?) Been a hard position to add to-I haven't-because as we all know this stuff could break $80 from here on air and rally right back on short covering. I'm continually enthused by the manner in which shorts get killed by selling $20 rotations off of swing highs. OTOH those shorts might sooner or later work. Irregardless there a zillion other things I'd rather short than gold.
One last observation: A good friend said something perceptive just yesterday. You hear of NO ONE saying "I'm shorting crude at $43" even though selling energy upticks has worked- yet traders want to short any market that's actually bullish. Little wonder why so many traders lose......
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