Okay 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.