[VID]Charles Biderman: Go Long Gold in Euros

[swissaustrian]

He's explaining a paper trade:
Go long Gold, short the Euro.

 

[DSAbug]

For those that don't know.. Biderman is a top options trader...

 

[pmbug]

I suppose the CME helped his cause with the lowering of margins on gold contracts.

 

[DSAbug]

I'm not so sure we wanted that honestly.. It just allows shorts to get more leverage so they can keep the pressure on longer.

 

[swissaustrian]

Biderman's trade was spot on as you can see here:
gold in Euros has performed much better than in USD since mid April

My guess is that this is going to continue as the FED has denied to print more today

 

[swissaustrian]

Gold in Euros is less than 1% shy of it's all time high, trading at 1344 (see chart above)

 

[DSAbug]

I wouldn't recommend anyone do a pair trade with their gold. Shorting Euros has a pretty big risk. It's called the US dollar.

That being said. Gold in euro terms is damn sexy.

 

[swissaustrian]

Gold is technically oversold in EUR terms (moreso than in USD). It has never been that oversold in EUR terms over the last 3 years. Chart is as of yesterday. Today it even got worse:

 

[DSAbug]

Gold and Silver both have Sub 30 RSI (14).. Usually we see lows within a couple % of a sub 30 reading. Naturally.. We are getting this right before year end and right before option expiration..

 

[bushi]

Naturally.. We are getting this right before year end and right before option expiration...

The million dollar question is.... Do "they" need to sell more naked shorts, to wham metals down, that they are later able to close, after causing these, with no loss/manageable loses? It seems to be the case - according to Max Kaiser, JPM's net silver short position grew about 50% during 2012. "Doubling down", on already enormous position (from ~$60bil to ~$90bil), and still getting nowhere, silver price wise, year on year?? Doesn't look to me like a manageable long-term strategy

Like, you know, there are mathematically sure winning strategies to every gambling game, assuming two things: 1) one have infinite money to gamble with, and 2), the house would not interfere in you gaming the roulette. No. 2 is the case (government will not prosecute TBTFs, even if they ADMIT the criminal charges and just pay the fine), but the problem is with #1 :rotflmbo:

But of course, it produces some nice BTFD opportunities* in the meantime.

yours truly,

* DISCLAIMER: the above isn't a financial advice, I am utterly incompetent in financial advisory matters, you can lose money investing in PMs, so if you listen to me and do lose - go and cry to your mom