Smart Money Betting on $4000oz Gold


The gold options market saw $1.75-M in block trades betting the precious Yellow metal could almost 3X in more than a year, surpassing the record.

Around Noon in New York Wednesday, 5,000 lots of a gold option giving the holder the right to buy the precious metal at $4,000 oz in June 2021 changed hands. The bets were sold at $3.50 oz.

It’s like 18-month term life insurance; what will the world look like if gold is at $4,000,” the head of metals derivatives trading at BMO Capital Markets, said in an e-Mail. “They are hoping for a quick violent move,” he said, referring to the people who bought the call options.

Gold futures climbed to a record $1,923.70 oz in Y 2011 as the Fed bought more than $2-T in debt to stimulate the US economy. While bullion has rallied 14% this year, the precious Yellow metal is still 24% below the current all-time high.

Bullion for delivery in February settled at $1,460.80 oz at 1:33p in New York. Futures for June 2021 delivery, which settled at $1,494.40 Wednesday, will need to almost 3X before expiration to make the call options profitable for its holder.

Have a terrific Holiday weekend