You got me confused here - are you now saying you'd rather be long on the futures, and not physical gold? I thought you were suggesting the opposite earlier... of course, if that's the case your leverage is through the roof (as it always is with futures), so the safe haven argument is completely out the window.
Why Gold has to go down...
- Thread starter PohPoh
- Start date
You got me confused here - are you now saying you'd rather be long on the futures, and not physical gold? I thought you were suggesting the opposite earlier... of course, if that's the case your leverage is through the roof (as it always is with futures), so the safe haven argument is completely out the window.
Quote from Subdude:
Back in at the highs? Well, that's quite contrarian in and of itself; usually, traders like to buy low and sell high.
Seriously though, you might be okay riding this thing a few points, but the money you make along the way will be erased when your puts expire worthless. Similarly, your put profit (if any) will take a big hit, when the underlying finally corrects (and it will). You should have written covered calls, instead.
Actually, did the covered call thing on the way up, but wrote the call at 920 so that didn't hold. Spent half my profits on the puts out to june; cheap lottery ticket. Still positive on the new trade, and more so after today.
I'm trading cautiously here, to be sure. However, I don't want to get caught not long in a blow off top situation. Worst case, I get stopped out at my entry for commission, or I'll move the stop up after today for some additional profit. This is starting to feel like an old momo trade situation. Was really preferring to buy lower back in, but that hasn't happened yet. With that said, I am hardly the authority on gold.
Gold and silver are relatively tiny markets. So regardless of macro inflation or deflation rates, there is still plenty of money to bid these up for whatever fundamental or speculative reasons.
Quant easing is coming ...
I'm with AMT4SWA on this long term.
We're looking at a potential "perfect storm" upside on gold.
* Fed doubled net assets; biggest increase in history by far
* > 10% deficit spending, one of the largest in the US, and implicitly will be financed by the Fed
* China is eager to diverisfy from the US dollar, though obviously for various reasons does not want to do this overnight. Still, this creates tremendous downward pressure on the dollar and upward inflationary pressure, a ticking time bomb, just as the reverse was true with low inflation in the late 90s.
* Bailouts have spent the money inefficiently, imo, with most of the funds primarily benefiting high-income employees and speculators who mis-analyzed risk. This will be paid by others -- and inflation is a likely means. Continued bailouts are targeting the auto industry and homeowners who took undue risk. This is extremely inefficient and HAS to be paid by other people.. somehow.
* Fed is highly leaning on preferring inflation over a major deflationary risk, just read Bernenke's academic research. He absolutely will inflate very quickly, and already is beginning to set processes in motion to bring long term US denominated debt to under 2% interest rates over the next few years.
* Social security and medical system liabilities seem politically untouchable. Obama and Congress will have enormous pressure over the next 10 years, combined with demographics, to "solve" the problem through inflation instead of nominal cuts. While both cut benefits, and are needed, hidden cuts are politically vastly easier to implement, and the path of least resistance.
We're looking at a potential "perfect storm" upside on gold.
* Fed doubled net assets; biggest increase in history by far
* > 10% deficit spending, one of the largest in the US, and implicitly will be financed by the Fed
* China is eager to diverisfy from the US dollar, though obviously for various reasons does not want to do this overnight. Still, this creates tremendous downward pressure on the dollar and upward inflationary pressure, a ticking time bomb, just as the reverse was true with low inflation in the late 90s.
* Bailouts have spent the money inefficiently, imo, with most of the funds primarily benefiting high-income employees and speculators who mis-analyzed risk. This will be paid by others -- and inflation is a likely means. Continued bailouts are targeting the auto industry and homeowners who took undue risk. This is extremely inefficient and HAS to be paid by other people.. somehow.
* Fed is highly leaning on preferring inflation over a major deflationary risk, just read Bernenke's academic research. He absolutely will inflate very quickly, and already is beginning to set processes in motion to bring long term US denominated debt to under 2% interest rates over the next few years.
* Social security and medical system liabilities seem politically untouchable. Obama and Congress will have enormous pressure over the next 10 years, combined with demographics, to "solve" the problem through inflation instead of nominal cuts. While both cut benefits, and are needed, hidden cuts are politically vastly easier to implement, and the path of least resistance.
Don't know about other people, but the whole point for me is diversification, given the set of probable scenarios. I am buying physical gold here, as I am long other assets, which are primarily paper (this includes cash). I am going to try buying other physical assets, such as land also, if I can.
Well, unless you can claim that you know the intrinsic value of gold, how much it's appreciated is irrelevant. It's all about the expected value of my portfolio in a variety of future scenarios. If you have any other distressed physical assets, pls do let me know.