The easiest trade in the world (that I think is wrong but seems to work anyway)

Discussion in 'Trading' started by tradethis, Jun 7, 2011.

  1. Okay here it is: I've been a gold/silver bull as a long term thesis for years. I've chosen to play this through the gold stocks because as we all know, they have the leverage to rising prices, right, right? Well, f3ck that. It hasn't worked. Sure some of the small names have been great but then there's the GG, AEM, KGC, NEM, ABX, and the list goes on and on. So here it is, the easiest trade in the world that I think "should" not work but the market in its infinite stupiddom (like wisdom but the opposite) seems determined to make work:

    1. Short any large cap gold stock. Should gold go up, short more.
    2. If gold goes flat for a while, the stock will get creamed.
    3. If gold goes down, ka-ching. You make a pile of money.
    4. Rinse and repeat.
    5. No risk. Easiest trade in the world. (for example, check out Newmont, 9 month downtrend. Even when gold has been up for those 9 months)
  2. Visaria


    Never understood why, if someone is bullish on gold, would buy gold stocks. Just buy gold!! You can leverage up if you want byuse of futures/ options, leveraged etfs.

  3. Welcome to ET - you fit right in.

    Watch the new HERD arrival in action, already brandishing the collective CREED .... "No risk. Easiest trade in the world"
  4. Roark


    What would you rather have? A golden egg or the goose that lays golden eggs? That's the reason people buy gold stocks. They want a piece of a company that's producing golden eggs.
  5. Easy money today. Gold barely down, gold stocks crushed. This trade will blow up some day but free money for now thanks to the market's stupidity.
  6. itsame


    Thats the problem with gold companies, You are not buying the goose that lays golden eggs, you are buying (incompetent) managers who are paying people to walk around looking for golden eggs.
  7. jfranco


    lol your aa funny dude
  8. Another week of easy money. Gold breaking out to new highs and the GDX gold share index down about 9 %. How easy is this trade? Let 'em rally a bit and then short 'em. Or just go long GLD/short GDX. AEM 52 week lows. NEM, GG, ABX getting killed after their earnings reports. Simple....almost too simple.
  9. This is a very good trading idea. Usually the miners will hedge, but they are not competent to do it correctly, and mistakes can be brutal. If I remember correctly Ted Butler has been writing about the grossly incompetent hedging of one of the big miners for years. I think it was ABX, but I could be wrong.
  10. And there it is again today. GLD down about 0.5% and GDX down 5-6%. Are you guys on this trade yet???
    #10     Aug 4, 2011