GLD question
We had a great question / suggestion from a member:
Kreager says:
GLD has made a double bottom. Credit Bull Pit Spreads below 133?
May 29, 2013 10:21 AM
My answer: In theory yes. BUT GLD is controlled by a handful of entities. This makes it vulnerable to wild swings that have nothing to do with fundamentals or technicals. They usually use it as a piggy bank anytime they need to raise cash to cover bad trades etc.
Look at the chart. It shows heavy drops then what seems to be stabilization. Then another sharp drop. I don't think that the drops are on valuations because GOLD is going up over long term for sure (scarce metal that can only gain worth). Unforetunately, it has become a 'headline' trade because of those few players. This of course is only my opinion.
The other problem is that i don't have anything recent level lower than here for which to shoot. So it would be hard for me to go into it with conviction. I do have friends that do it but at a considerable risk not fitting to the portfolio here. If you are comfortable enough, Kreager has a great point.
My answer: In theory yes. BUT GLD is controlled by a handful of entities. This makes it vulnerable to wild swings that have nothing to do with fundamentals or technicals. They usually use it as a piggy bank anytime they need to raise cash to cover bad trades etc.
Look at the chart. It shows heavy drops then what seems to be stabilization. Then another sharp drop. I don't think that the drops are on valuations because GOLD is going up over long term for sure (scarce metal that can only gain worth). Unforetunately, it has become a 'headline' trade because of those few players. This of course is only my opinion.
The other problem is that i don't have anything recent level lower than here for which to shoot. So it would be hard for me to go into it with conviction. I do have friends that do it but at a considerable risk not fitting to the portfolio here. If you are comfortable enough, Kreager has a great point.
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