– The Financial Times has been running a debate all week on whether the U.S. and E.U. ought to implement more fiscal stimulus or start reining in their fiscal deficits and reducing their debts: http://www.ft.com/austeritydebate (registration required). A couple of thoughts on this, from a layman’s perspective follow. First, it seems that if you [...]

One of a few recent articles about whether gold is a bubble appeared in the Wall Street Journal last week, “Is gold the latest bubble?”. From the WSJ article,
Second, before we assume the gold bubble has hit its peak, let’s see how it compares with the last two bubbles — the tech mania of the [...]

Back on May 10th I noted the divergence between the physical gold trust PHYS and the gold ETF GLD and observed that there might be potential for a pairs trade in that divergence.
Also on May 10th (I learned today), the anonymous proprietor of the new blog ETF Base made a similar observation — and [...]

From Short Screen earlier today:
- Re-shorted HGSI at $24.34 today. Same rationale as last time, pretty much. Using a trailing stop in case these folks cure the common cold while I’m short.
- For some IRA short exposure, picked up shares of inverse ETFs EDZ at $53.65 and FXP at $45.01. Using trailing stops.
- [...]

Which makes puts on GLD cheap. The cost of buying protection against a greater than 20% drop in the price of GLD over the next six months using the optimal put option contracts is about 1.1% of the position value. That’s about how cheap SPY puts were back when everything was sunny.

Will the bull market [...]

On Friday, Matt passed along an e-mail from a trader friend of his recommending the Sprott Physical Gold Trust (NYSEArca: PHYS). On Monday, I noticed a divergence in the price movements of PHYS and SPDR Gold Shares (NYSEArca: GLD):
Via Matt, I asked his friend if he thought there was a potential pairs trade in this [...]

N.B., for those unfamiliar with options terminology, what this fellow is referring to — selling naked calls, etc. — is essentially the opposite of hedging. Instead of buying options as a hedge to reduce risk, he is taking on risk by selling options on securities he doesn’t own. E.g., if you were to sell me [...]