Michael, you started this thread so I'll direct my general comments to you.
I have read quite a few posts which forcast the gold market direction in terms of technical analysis. This stands in distinct contrast to what appears to be overwhelmingly potent fundemental issues which direct the price of this commodity. I think technical analysis of a commodity, gold in particular, fails to address the underlying basis for market moves, ie. currency fluctuations, supply/demand, political/governmental intervention, macro-economic trends. If the price of gold moves I would rely on fundementals as a basis for the move rather than chart configurations' influence on buy/sell behavior. I know that this is a long-standing detraction from the validity of all technical analysis but I believe that it is justifiable when it comes to gold.
I know that mining gold is expensive. If the price goes below a certain point, mining it is a losing proposition. This is the strongest case for price support I can see. If, as I have heard recently, mines are being closed for this reason (pricing), supply will dry up and demand will exert it's effect and buoy the price up. I suspect that we are at that price point now.
It was mentioned recently that gold stocks would be effected equally by a broad market correction/crash. This assumption has not been tested in this forum. I would like to ask anyone if they have access to historical data that would confirm this.
A general question: If one were to buy XAU calls that expire in-the-money and are exercised, what would a holder of this option receive? In other words, what is the basis of the XAU?
If one were to play the bull in gold, one could:
Go long gold futures
Go long gold stocks
Buy the metal (coins & ?)
Buy XAU calls
Sell XAU puts
Short gold futures
Short gold stocks
Question: Have I missed anything? Am I correct in assuming that the greatest leverage (& risk) is in the futures?
In case you haven't checked this out, it's quite good for gold info:
gold-eagle.com
All for now.
Onward...
Mark |
