Home› Precious Metals

emerging market chaos - affect on gold?

derrybderryb Posts: 36,824 ✭✭✭✭✭
in Precious Metals
Swiss Franc, Euro and Yen should strenghten in the face of an emerging market currency crisis. Since they make up 74.8% of the dollar index will they drive the dollar index down? If so, this would normally be good for gold. We'll soon see.

"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey

Comments

  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭
    Yen being weak has been the supporting structure for weak gold since the middle of 2011. If this recent breakout above 100 USD/YEN is negated then gold could do very well. 95-97 would still be a back test of that breakout. The other flip side is that the AUD/USD was another key part of the past 2-1/2 years. And the Aussie may still be headed a lot lower (ie 80-85). The other rock currency (USD/CDN) has been in a huge rally for awhile now. Until the AUD and CDN start strengthening against the dollar the fall in the USD/YEN may not be enough by itself. Then you have the EUR/USD. But I think the other 3 carry much more weight as a group. Weak AUD, CDN, and commodities have been the norm for 2-3 yrs now. Fun times ahead.
    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
  • derrybderryb Posts: 36,824 ✭✭✭✭✭
    On the other hand, this could mark the end of gold's inverse relationship with the dollar index as surely the dollar itself stands to strengthen from an emerging market currency crisis. I'm gonna go with this option.

    "Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey

  • cohodkcohodk Posts: 19,129 ✭✭✭✭✭
    surely the dollar itself stands to strengthen from an emerging market currency crisis. I'm gonna go with this option.



    image
    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • derrybderryb Posts: 36,824 ✭✭✭✭✭
    "perhaps the Fed understands that a dollar crisis is a bigger crisis than a bank crisis and that its bailout of the banks is undermining the dollar. The question is: will the Fed let the banks go in order to save the dollar?" - Paul Craig Roberts and David Kranzler

    "Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey

  • WingsruleWingsrule Posts: 3,011 ✭✭✭✭
    Maybe I'll head to Canada this weekend and get an extra 11% on my good old USD.
  • BaleyBaley Posts: 22,660 ✭✭✭✭✭


    << <i>On the other hand, this could mark the end of gold's inverse relationship with the dollar index as surely the dollar itself stands to strengthen from an emerging market currency crisis. I'm gonna go with this option. >>



    there ya go image

    Liberty: Parent of Science & Industry

  • DoubleEagle59DoubleEagle59 Posts: 8,314 ✭✭✭✭✭


    << <i>Maybe I'll head to Canada this weekend and get an extra 11% on my good old USD. >>



    You mean an extra 21% don't you?
    "Gold is money, and nothing else" (JP Morgan, 1912)

    "“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)

    "I only golf on days that end in 'Y'" (DE59)
  • rickoricko Posts: 98,724 ✭✭✭✭✭
    I will just hold gold (and silver) and watch the fun.....image Cheers, RickO
  • cohodkcohodk Posts: 19,129 ✭✭✭✭✭


    << <i>

    << <i>Maybe I'll head to Canada this weekend and get an extra 11% on my good old USD. >>



    You mean an extra 21% don't you? >>




    The world is on sale!!! Darn inflation. image
    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • jmski52jmski52 Posts: 22,854 ✭✭✭✭✭
    At what point does the "cleanest dirty shirt" paradigm stop working for the dollar?

    "Well, Stanley - that's a fine kettle of fish we've gotten ourselves into!"
    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • bronco2078bronco2078 Posts: 10,225 ✭✭✭✭✭


    << <i>

    << <i>Maybe I'll head to Canada this weekend and get an extra 11% on my good old USD. >>



    You mean an extra 21% don't you? >>




    Isn't there a 21% sales tax though?image
  • DeepCoinDeepCoin Posts: 2,781 ✭✭✭
    Someone just bought 50,000 contracts of GLD for 1.18 at a strike price of 120.... June, big bet on a gold spike... be interesting to watch it play out. Info from CNBC for what it is worth
    Retired United States Mint guy, now working on an Everyman Type Set.
  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭


    << <i>

    << <i>On the other hand, this could mark the end of gold's inverse relationship with the dollar index as surely the dollar itself stands to strengthen from an emerging market currency crisis. I'm gonna go with this option. >>



    there ya go image >>




    50% right. The dollar has maintained the inverse relationship vs. gold for the majority of the past 14 years. The inverse relationships between Gold vs. USD/Yen, USD/AUD, and USD/CAD are still the main drivers over these past 4 years.

    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
  • cohodkcohodk Posts: 19,129 ✭✭✭✭✭


    << <i>Someone just bought 50,000 contracts of GLD for 1.18 at a strike price of 120.... June, big bet on a gold spike... be interesting to watch it play out. Info from CNBC for what it is worth >>



    Volume in the silver futures looks good. I see a good chance for a rally towards 20.
    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • jmski52jmski52 Posts: 22,854 ✭✭✭✭✭
    Someone just bought 50,000 contracts of GLD for 1.18 at a strike price of 120.... June, big bet on a gold spike... be interesting to watch it play out. Info from CNBC for what it is worth

    They have options on ETFs? How much is one contract GLD for 1.18 at a striking price of 120 in June? I'm just trying to get a handle on how much collateral they had to put up for 50,000 contracts...........
    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭


    << <i>Someone just bought 50,000 contracts of GLD for 1.18 at a strike price of 120.... June, big bet on a gold spike... be interesting to watch it play out. Info from CNBC for what it is worth

    They have options on ETFs? How much is one contract GLD for 1.18 at a striking price of 120 in June? I'm just trying to get a handle on how much collateral they had to put up for 50,000 contracts........... >>




    I'm not an options playa but I think the guy pays 50,000 x $1.18/contract = $59,000 for that entire position. $59K to control a $5.75 MILL overall position. Going to need around $1251 gold to get in the money by expiration. More than likely they close out early if gold rallies up into the $1230's or $1240's. The June 30th contract has the $1.18 strike price at 120....but it doesn't have that 50,000+ volume or O/I. ???? Maybe the options gurus can help us out.

    Options on GDX, GDXJ, SLV, you name it. Go here: 19 June 2015 options for GLD



    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
  • rawteam1rawteam1 Posts: 2,472 ✭✭✭
    Omg....
    keceph `anah
  • rawteam1rawteam1 Posts: 2,472 ✭✭✭
    I am astounded no one knows what's going on...

    It's a 5.9 million dollar wager...
    keceph `anah
  • JustacommemanJustacommeman Posts: 22,847 ✭✭✭✭✭


    << <i>

    << <i>Someone just bought 50,000 contracts of GLD for 1.18 at a strike price of 120.... June, big bet on a gold spike... be interesting to watch it play out. Info from CNBC for what it is worth

    They have options on ETFs? How much is one contract GLD for 1.18 at a striking price of 120 in June? I'm just trying to get a handle on how much collateral they had to put up for 50,000 contracts........... >>




    I'm not an options playa but I think the guy pays 50,000 x $1.18/contract = $59,000 for that entire position. $59K to control a $5.75 MILL overall position. Going to need around $1251 gold to get in the money by expiration. More than likely they close out early if gold rallies up into the $1230's or $1240's. The June 30th contract has the $1.18 strike price at 120....but it doesn't have that 50,000+ volume or O/I. ???? Maybe the options gurus can help us out.

    Options on GDX, GDXJ, SLV, you name it. Go here: 19 June 2015 options for GLD >>



    Looks like there is plenty of open interest on the 120's. The 119's not so much

    Mark
    Walker Proof Digital Album
    Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
  • jmski52jmski52 Posts: 22,854 ✭✭✭✭✭
    It's a 5.9 million dollar wager...

    Not really, since the purchaser only stands to lose the cost of his purchase price, i.e., $59,000 if they expire out of the money. He's not gonna make 5.9 million either, unless gold doubles by June.

    Correct?

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • cohodkcohodk Posts: 19,129 ✭✭✭✭✭
    One contract represents 100 shares. Each contract cost $118. 50,000 × $118 = $5.9 million.

    The contract has a strike price of $120. If GLD is over 120 then the option will be "in the money". Option carry time premiums which I won't get into but if GLD goes to 122 before the 3rd Friday in July then each contract would be worth $200 or $10 million for the position. If it goes to 125 then each is worth $500 or $25 million total.
    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • JustacommemanJustacommeman Posts: 22,847 ✭✭✭✭✭


    << <i>One contract represents 100 shares. Each contract cost $118. 50,000 × $118 = $5.9 million.

    The contract has a strike price of $120. If GLD is over 120 then the option will be "in the money". Option carry time premiums which I won't get into but if GLD goes to 122 before the 3rd Friday in July then each contract would be worth $200 or $10 million for the position. If it goes to 125 then each is worth $500 or $25 million total. >>



    The June 120 is now selling for $.61

    Mark
    Walker Proof Digital Album
    Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
  • cohodkcohodk Posts: 19,129 ✭✭✭✭✭


    << <i>

    << <i>One contract represents 100 shares. Each contract cost $118. 50,000 × $118 = $5.9 million.

    The contract has a strike price of $120. If GLD is over 120 then the option will be "in the money". Option carry time premiums which I won't get into but if GLD goes to 122 before the 3rd Friday in July then each contract would be worth $200 or $10 million for the position. If it goes to 125 then each is worth $500 or $25 million total. >>



    The June 120 is now selling for $.61

    Mark >>




    Somebody just made a cool $2.5 mill. Not bad for a days work.
    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • JustacommemanJustacommeman Posts: 22,847 ✭✭✭✭✭


    << <i>

    << <i>

    << <i>One contract represents 100 shares. Each contract cost $118. 50,000 × $118 = $5.9 million.

    The contract has a strike price of $120. If GLD is over 120 then the option will be "in the money". Option carry time premiums which I won't get into but if GLD goes to 122 before the 3rd Friday in July then each contract would be worth $200 or $10 million for the position. If it goes to 125 then each is worth $500 or $25 million total. >>



    The June 120 is now selling for $.61

    Mark >>




    Somebody just made a cool $2.5 mill. Not bad for a days work. >>



    He was obviously betting on the FOMC meeting and lost. He needed a nice spike. Even if GLD manages to move towards 120 he will not realize a payday unless it happens pretty quickly. The decay is already ticking. He probably has two weeks to get a major spike.
    Mark
    Walker Proof Digital Album
    Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
  • cohodkcohodk Posts: 19,129 ✭✭✭✭✭
    And the guy on the other side is smiling today. How do we know the opening trade was not a sale?
    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • derrybderryb Posts: 36,824 ✭✭✭✭✭
    image

    "Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey

  • jmski52jmski52 Posts: 22,854 ✭✭✭✭✭
    And the guy on the other side is smiling today. How do we know the opening trade was not a sale?

    It seems improbable that only one guy was on the opposite side of this trade. For all we know, HFT computers are on both sides in the Comex and also in options concurrently.
    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • cohodkcohodk Posts: 19,129 ✭✭✭✭✭
    Or perhaps a mutual fund thinking GLD wasn't going higher sold the calls to rake in a little money, thus creating a sort of dividend. I would do it all the time on this sort of investment since it is most likely range bound for a considerable time. Why not sell calls and get an extra 5-8% annualized return.
    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

Sign In or Register to comment.