The spread that occupied most of our attention this week was $GLD-$GDX, and we didn’t even trade it this week.  We have been short $GLD-$GDX since late April and the spread recently moved sharply against us.  The spread is currently trading at its highest level since late 2008.  Of course it’s always a good idea to re-evaluate a position that has made such a large move.  We’ve decided to leave it on for now because we don’t believe there has been any fundamental change in market conditions to justify the current level.  We feel the move is attributable to the recent sell off in silver (and other commodities).  We think this sell-off spooked some holders of $GDX even though gold itself has held up rather well compared to other commodities.  Also, our position is relatively small compared to the size of our portfolio.  We try not to have many positions that are so big that we can’t take a little pain once in awhile.

Written by Norm Winer. Follow me on Twitter and StockTwits.