Back in 2008 when the markets crashed, everything crashed along with them: Oil, Silver, Gold, the Euro,…
Yet this time around, that doesn’t seem to be the case:
The Dow Jones Index lost 5.82% this week alone.
The German DAX index lost 7.83% this week.
Oil lost 4.48%.
The Euro rose 2.62% (?!? Isn’t the dollar supposed to be a safe haven??)
Gold rose 4.20%.
Yet even after the rally this week, gold’s COT chart still looks very bullish, as Commercials increased their short position only slightly, from 24,458 contracts to 29,948 contracts.
This will be interesting for the weeks ahead. Stock markets appear to be in full panic mode, and investors seem to flock to gold this time around.
It will be very interesting to see the open on Sunday night/Monday morning.
If the markets go bananas, it could be that Gold GAPS up above the 50 weeks average, which is currently at 1192.90.
That would indicate that gold has further to rally, all the way up to the 200 weeks moving average, which is currently at 1417.
This could be accomplished in a very short time if it happens.
If you missed the opportunity to buy a couple of weeks ago, but would still like to join the party, go for short dated options on GLD:
For example, the GLD Sept 18th Call option on GLD with excercise price $125 has a bid at $0.09 and ask $0.10.
This means that you can buy 1 Call option for 100 x 0.10$ = 10$.
If GLD (currently trading at 111.13) trades below $125 by Sept 18th, the option will expire worthless.
However, for every $1 above $125, the option increases by $1. For example: GLD trades at $135 (implicating Gold around $1400).
The option is now worth $135-125=$10.
Since you bought the option for only $0.10, you have a 100x increase in price.
For every $100 you speculate in this option, you could make about $10 000 if Gold trades around $1400 by September 18th.
Is it likely? I don’t know.
Is it possible? Yes. But don’t look at the stock markets then. They will look HORRIBLE.
Just know that options are risky. If the market goes against you, your whole “investment” will be lost.
But I’d rather buy this option than a lottery ticket.