$GLD – $GDX Not Too Late to Short
Tuesday, July 26, 2011 at 1:22PMOkay we are going to talk our book this week. The $GLD-$GDX (Gold Miners ETF – Gold ETF) spread, which we sold on July 7th, continued its steady decline. We sold this one based on our macro view. In May and June many traders seemed to think that the Fed’s easy money policy was close to ending. This was reflected more in the price of $GDX than $GLD, $GDX being the more speculative way to bet on gold prices. Also, a stock market sell-off in early June didn’t help the mining stocks. Well it appears sentiment has changed and mining stocks are moving higher again. $GDX is up 11% month to date. In spite of this impressive move we believe it’s not too late to enter this trade. It’s not unreasonable to think this spread could return to levels last seen in March. For now we are holding our position.
Written by Norm Winer. Follow me on Twitter and StockTwits.
Reader Comments (1)
a very large spread has emerged between some of the US coal companies (BTU, ACI) and the appalachian coal price QL. The stocks have fallen about 50% over the last 5 months(much of that in the last few weeks)..while the coal price has only fallen around 10%. QL is a very thinly traded futures contract, but I still think there are algorithms or strategis that would work now that we are seeing this spread get to such a wide level.