In the contrarian of contrarian moves I'm thinking of building a gold short and do not anticipate needing to play with stops. As I felt with last years's oil bubble, I feel gold is fully emblazoned in one currently. And the move in gold this year could turn out to be like last year's move in oil, which many tried to argue was backed by the seemingly indisputable fundamentals but was more like a great work of fiction. The oil, and now gold, commodity fervor is more likely backed by structural issues related to ETF's and their weight in the front month contracts, lack of position limits in futures and the age ol' tradition of momentum begetting momentum and/or investors chasing...Moreover, the number of calls for gold to $2000, or $3000 or even $5000 has also reached a new level of intensity....
This would not be a timing trade per se and timing the turn on a bubble deflating is near impossible and I'm not doing that. I would simply be allocating a very small part of my gains this year to this new gold short, and as gains built, likely continue making the short position larger....
Given my macroeconomic stance, I do feel as though my timing on this potential trade may be pretty good. Time shall tell. If I'm wrong I'm wrong and it won't cost me much. However, if I'm correct and this fervor fades the move could be quite quick as well as sharp and the gains made on the double short could easily exceed 30% or greater....
position: thinking of shorting gold
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment