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Cheap pricing on bearish gold miner bets

  • The price action in gold miners may tend to be down, but the relative cost of betting against further declines is as cheap as it's been in awhile, reports Bloomberg. The so-called skew on the GDX - the relationship between put option and call option pricing for the ETF - fell to 0.53 recently, the lowest since July 2009.
  • The so-called worry gauge for the metal itself - the CBOE Gold Volatility Index - dipped to a 7-month low last week. Gold is up a hair today to $1,286 per ounce, and the GDX is off 1.8%.
  • Gold miner ETFs: GDX, GDXJ, NUGT, DUST, GLDX, GGGG, RING, PSAU, JNUG, JDST
Comments (11)
  • DeepValueLover
    , contributor
    Comments (8140) | Send Message
     
    Falling skew on rising bearishness?

     

    That is what can turn a tiny rally into a huge rally!
    11 Nov 2013, 01:08 PM Reply Like
  • wapiti
    , contributor
    Comments (698) | Send Message
     
    Seth Klarman has been adding to/ buying gold mining positions. Obviously he too recognizes the value in them
    11 Nov 2013, 01:54 PM Reply Like
  • sbeardsley702
    , contributor
    Comments (65) | Send Message
     
    Wake me up when Gold miners recoup 50% of the value lost since 2009. Bunch of value sucking dogs in this sector.
    11 Nov 2013, 01:59 PM Reply Like
  • Jason Burack
    , contributor
    Comments (1721) | Send Message
     
    A lot of that is due to manipulation of the miners using HFT and manipulation of the paper gold and silver price. If you do a lot of due diligence into the gold and silver markets as I have (been studying extensively since 2007) it is nearly impossible to conclude they are not massively manipulated on a daily basis without being intentionally ignorant or lying to oneself and others.
    11 Nov 2013, 02:53 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    Thank you for your insights; I expect gold and silver to keep staying down even if Wall Street get hit by a comet....but I am in for the long term
    12 Nov 2013, 09:54 AM Reply Like
  • Gary Jakacky
    , contributor
    Comments (2400) | Send Message
     
    My chart of implied volatility for GLD shows i.v. reverting to a much lower low that prevailed before a huge spike last april. I know something can be said for skew, but there appears to plenty of room for 'fear' to fall?
    11 Nov 2013, 02:06 PM Reply Like
  • Cameron Swinehart
    , contributor
    Comments (303) | Send Message
     
    You make an important point. GLDs i.v. rank is around 29% leading me to believe that gold has been bottoming out for sometime. As volatility picks up, I expect GLD to go higher.
    11 Nov 2013, 06:06 PM Reply Like
  • TradeNice
    , contributor
    Comments (9) | Send Message
     
    Miners are going to rocket from a technical standpoint. My top picks $IAG $ANV $KGC $SLW . Quote me on this Nov 11 2013 1:18PM
    11 Nov 2013, 05:36 PM Reply Like
  • PM's Rock
    , contributor
    Comments (99) | Send Message
     
    Unless Gold becomes a worthless relic, which I highly doubt, the miners have to be a value play by now. Is fiat really more tempting?

     

    If producers stop producing doesn't supply and demand kick in. Doesn't that mean those Miners that don't go belly up will be better positioned when QE ends?

     

    Sorry, but I will not be fleeced by the doom and gloom folks. Time to buy the miners and the physical metal. I have lost before but this time I am sticking with it for the reward.

     

    If you trust the FED and printing, disregard my post.
    11 Nov 2013, 05:36 PM Reply Like
  • sugarsail1
    , contributor
    Comments (60) | Send Message
     
    Bitcoin is a value play.
    12 Nov 2013, 07:32 PM Reply Like
  • DeltaSD
    , contributor
    Comments (3) | Send Message
     
    I wouldn't buy outright at this point, too many factors playing against gold. Long term I am very bullish however for the next two quarters I'm more bearish. Bought several 2015 calls on KGC and half as many ATM puts expiring in february. I expect kinross earnings to be disappointing and gold can always move lower.
    11 Nov 2013, 09:09 PM Reply Like
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