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Getting Bullish on Gold

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You know things are taking a turn for the weird when I’m looking at getting long gold. But that’s exactly what I’m doing in the SPDR Gold Trust (TLT) through a ratio, diagonal calendar spread. That’s a lot of adjectives. Here it is in simple order form:

I’m stepping into this trade because I think gold still has a push left as we head into all the uncertainty of this fall. The U.S election, Euro situation, food inflation and the general lack of trust for the financial markets may have people turning once again to gold as a safe haven. Certainly if interest rates remain at effectively zero the opportunity cost of owning gold is less onerous.

Chart wise GLD had been, and still is, forming a triangle from which it should break out. It appeared to do so last Friday, but then failed to take out the $158 resistance level. That action should have knocked out both some bulls and bears. And now with it holding the 50 dma at $154.50 I’m thinking that fake out now offers a good lower entry point. It is still in an ascending triangle which I think can be resolved to the upside.

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POSITION:  Position in GLD options.

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