Gold is still a bubble. Bubbles that rise over 600% in 10 years don't deflate by simply going down 50%. Most bubbles of this nature deflate back to close to their original value. In this chart, I explain a lot of the fundamental factors that drove gold price higher, China's role in gold, and why a Chinese hard landing (if it occurs) will cause a new great deflation, which will see gold fall back to it's values in the early to mid 2000's.
Trading idea? As a long-tail hedge, you can play for an enormous tail-risk return by purchasing OTM leap puts on the ETF
GLD
. January 15th 2021 puts with a strike price of $90 provide a 70x payout on the value of the original put option if $GLD falls down to $40 per share. This is a reasonable expectation if this plays out in the way described here. This is my big-short. Obviously it requires things to line up to occur, but I feel like the possibility here is very real, and nobody is expecting this to happen despite the fundamental basis that aligns quite well with the technical view of Gold. If it happens, it will surely be called a black swan in hindsight, but I feel this is more a gray rhino. It's not hard to see if you simply look at what is happening / what happened.
Much thanks to Jeff Synder for information on the eurodollar system that helps put all of this in perspective: http://www.alhambrapartners.com/commentaryanalysis/
For some great analysis on China, I encourage people to read https://deep-throat-ipo.blogspot.com/ which provides excellent, if sometimes scary analysis on what is happening in the east.
And as always, take your own risks. This isn't necessarily a play on what is most likely to happen. It's a play of "heads I lose a little, tails, I win a truckload". Please do not dump your savings into something like this.
Trading idea? As a long-tail hedge, you can play for an enormous tail-risk return by purchasing OTM leap puts on the ETF
GLD
. January 15th 2021 puts with a strike price of $90 provide a 70x payout on the value of the original put option if $GLD falls down to $40 per share. This is a reasonable expectation if this plays out in the way described here. This is my big-short. Obviously it requires things to line up to occur, but I feel like the possibility here is very real, and nobody is expecting this to happen despite the fundamental basis that aligns quite well with the technical view of Gold. If it happens, it will surely be called a black swan in hindsight, but I feel this is more a gray rhino. It's not hard to see if you simply look at what is happening / what happened. Much thanks to Jeff Synder for information on the eurodollar system that helps put all of this in perspective: http://www.alhambrapartners.com/commentaryanalysis/
For some great analysis on China, I encourage people to read https://deep-throat-ipo.blogspot.com/ which provides excellent, if sometimes scary analysis on what is happening in the east.
And as always, take your own risks. This isn't necessarily a play on what is most likely to happen. It's a play of "heads I lose a little, tails, I win a truckload". Please do not dump your savings into something like this.