With gold soaring at its all time highs many investors are now preparing for its descent. Gold is expected to crash soon and crash hard but some investors believe that it will continue to go up and down with high volatility for still some time. Which analysts an option trader decides to believe is up to them and their option trading strategies.
Because gold is considered highly inflated right now many market analysts believe that the price will plummet when the bubble bursts.
Stephen Hammers, co-manager of the recently launched $23 million Compass EMP Commodity Long/Short Strategies fund, doesn’t expect gold’s downward trajectory to last very long.
As the price of gold fell to $1,640 in February, Hammers decided it was time to go short the precious metal. Two months later, his bet looks prescient.
Gold futures plummeted 9.4 percent Monday, to a two-year low of $1,360.60 an ounce. On Tuesday, gold was last trading at $1,377.48, up about 0.7 percent.
Hammer expects gold to jump back above $2,000 an ounce next year amid political and economic strife. He is already planning to start buying gold again by the end of the year.
It’s a back-and-forth dance move that other investors are practicing as well. To finish reading Gold primer: post plunge trading strategies click here.
Other analysts believe that the recent fall of gold will simply lead to a subsequent recovery and eventually another fall as investors alternate between buying and selling. Being on the right side of these trades can make an options trader rich, whereas being on the wrong side could easily wipe someone out.