Monday, November 16, 2009

GLD - Ratio Spread




I just closed my GLD ratio call spread for a 100% ROI in 3 days. It may be too early but the profit is too tempting.

The charts above are my projections for gold. It touches 1135 as I write. I believe it will hit 1300 by March next year. Before that, there should be a small correction. Any move below 1100, I will be adding to my bull trades. This move is very strong and is not going to slow down soon.

The first chart gives 3 scenario on how gold price will move. Scenario 2 is the most probable scenario.

I also drafted out the Fib. Fan. It agrees with the projection on the first chart.

Below are some not so common arguments why I am bullish on Gold:

1. Central bankers are net buyer of Gold this year.
2. Many successful money managers are buying gold - David Einhorn, Paul Tudor Jones, and Jim Rogers
3. In Financial times last week, 2/3 of 100 respondents to a survey by the Family Office Channel said that the super rich are now more likely to invest in gold and other commodities
4. Total World bailout is about 19 Trillion dollars. All the gold ever mined now is about $5T dollars
5. 2008 Gold production is about $73 billion. Demand is far greater than supply now.
6. The market cap of all the gold minors is only about the same size as WMT. Oil and Gas industry is 12 times higher.

The panic has not started yet. Once it starts, gold price will be parabolic. The fact that gold has exceeded the pre-bust high in 2008, should be a monumental indication we are headed high.

As I said, there should be a short correction. Once there, I will load up again to my current positions which is already sizeable.
Posted by at

1 comment:

  1. josephNovember 16, 2009 at 10:52 PM

    Not sure how you calculate ROI for a ratio spread. The more reasonable one is ROR.

    ReplyDelete

Subscribe to: Post Comments (Atom)

Visitors to this blog

Locations of visitors to this page

About Me

An engineer by training graduated with B.Sc (hons) and MBA from Strathclyde university in Glasgow, Scotland. Started as an engineer in R&D for 3 years with Philips. Then, worked with DuPont for 13 years. Last job was VP, Marketing for Asia Pacific. Left to start a number of companies in various segments which include a large electronic distribution, a VoIP provider, an internet trading portal in Australia,and an executive training consultancy firm. Have listed companies in NYSE, Australia Stock Exchange, Singapore Stock Exchange Main Board. I was on the Board of Directors for 1 company listed in Thailand, 1 in Singapore and 1 in Australia. Was in the senior management of a company listed in NYSE. Still holding major share positions in the VoIP and Executive training companies. Both are private companies.

Disclaimer

These articles merely reflect the opinions of this author and are by no means a guarantee of future economic conditions, market or stock performance. Though the author strives to provide accurate and relevant data, he sometimes relies on external sources and cannot assure the reader of the accuracy of these external sources. Additionally, these articles are provided for INFORMATIONAL PURPOSES ONLY and are NOT MEANT to provide investment advice to anyone. For investment advice, please consult your professional adviser.