XAU vs Gold...Question

P

PohPoh

Apparently the ratio between XAU and gold is 5.6...a 25 year low?

Someone asked me about buying XAU and selling gold...

What's the best ratio to take advantage of this spread??

Does that mean I buy 560 shares for every 1 short futures?

I'm clueless with stocks, so some advice would be appreciated..
 
$XAU is an index, you can't trade it directly. It is optionable though. The corresponding ETF is GDX which trades around $37.35 right now. That would put the ratio $XAU/GDX to around ~4.0.

A GC point equals $100, so each contract @ ~835 (Dec) equals approx. 83,500 (interest excluded). Simply buy the corresponding amount of GDX (83,500 / 37.35 = ~2235) for each contract short DEC GC.
 
Quote from makloda:

$XAU is an index, you can't trade it directly. It is optionable though. The corresponding ETF is GDX which trades around $37.35 right now. That would put the ratio $XAU/GDX to around ~4.0.

A GC point equals $100, so each contract @ ~835 (Dec) equals approx. 83,500 (interest excluded). Simply buy the corresponding amount of GDX (83,500 / 37.35 = ~2235) for each contract short DEC GC.
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So I would buy 2235 shares of the GDX ETF (which is the ETF for the XAU) for each short GC?

Thanks Mak...
 
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