January 29, 2009
That having been said, and this is probably an Occam’s 5th Grade level observation, but is there anyone out there that believes that if/when gold breaks through the 1000 level, it doesn’t zoom straight to 1300 or 1500? Once that huge psychological barrier of 1000 is broken (it has already been tested once) I think the sky is the limit.
A simple strategy would be to buy gold (futures, GLD, or gold shares are probably even better than GDX) call options far out of the money. Since I have no idea when gold might break 1000 (if it ever does) it could also make sense to buy a call spread and keep rolling them over until gold gets to 1000.
Just a thought.
PS If there is anyone who doesn’t think that risk management is important, then you clearly don’t know anyone who (still) owns Russian stocks.
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