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. why not buy gold short the stocks
     
    #11     Aug 4, 2011
  2. wtf are you doing here:confused:
     
    #12     Aug 5, 2011
  3. $1705 gold....wonder how much gold stocks will be DOWN tomorrow. Or will they finally, finally, finally become the leveraged play that they should be?
     
    #13     Aug 8, 2011
  4. i wonder how much gold will drop untill september,1500?1600?
     
    #14     Aug 8, 2011
  5. kalasend

    kalasend

    <a href="http://www.flickr.com/photos/11362126@N04/6022608734/" title="gdx_gld_gc by kalasend, on Flickr"><img src="http://farm7.static.flickr.com/6188/6022608734_1bfcfa5a03_b.jpg" width="1024" height="444" alt="gdx_gld_gc"></a>

    Thought you would like this picture.
    Orange line is GDX (gold miners ETF, pls let me know if it isn't a good basket) to GLD ratio
    Blue line is gold's front month future

    It looks like their correlation got broken in early Apr.
    And then there were some short periods of getting inline. But currently it's out of sync at its largest scale so far...
     
    #15     Aug 8, 2011
  6. what does 'front month future' mean?
     
    #16     Aug 8, 2011
  7. kalasend

    kalasend

    It's the latest, soonest-to-expire future contract. It is the closest you can get to spot gold price, if you choose to trade gold futures.
     
    #17     Aug 8, 2011
  8. kalasend

    kalasend

    #18     Aug 9, 2011
  9. thank you
     
    #19     Aug 9, 2011
  10. rew

    rew

    It's true that gold stocks have for the most part been one big disappointment. I think that this is because expectations for the gold stocks have changed. People used to buy gold stocks at silly high P/Es, like 40 or 50. Now people buy at P/Es of 16 to 30.

    If you just want leverage on the gold price there are lots of better ways to do it than buying gold stocks. You have futures, calls on futures, ETFs, calls on ETFs, 2x ETFs, calls on 2x ETFs.
     
    #20     Aug 9, 2011