Ron: In the deep recesses of history is visible a very fundamental conflict between the forces for hard money and those for fiat money. Simplistically, there is not sufficient hard money, read Gold & Silver, to facilitate running large economies and world trade. (Besides, producers of Gold & Silver get to call the shots, not bankers, in a hard money system).
The consequence of losing the battle against Gold, today, is economic depression. The problems are so big that "they" must constrain gold at all costs, not forget it.
Assume that Greenspan, et. al., succeed at maintaining Gold in a $275-305 range. Trading strategy would be to buy optionable gold stocks, e.g. ASA, HM, ABX when a) POG is about $275, b) price of share has corrected, and, c) when option implied volatillity has collapsed. Then await next POG rally and when near $300 sell call options on some portion, not all, of your Gold shares. Presumably, POG then drops back toward $275, share price corrects and implied volatility of option collapses. One then buys back the options or, alternatively, they expire unexercised. Have your cake and taste the icing?
Do we outperform Treasuries? Rate of return is higher than Treasuries because risk is higher. But, in case gold goes through $305 ceiling, we get partial gains even if options get called. We've still got the cake, they option buyers eats the icing.
RH |
