Strategic trade
Trade view / 23 August 2016 at 11:43 GMT

#SaxoStrats: Gold miners ETF to tumble as US outperforms

Head of Equity Strategy / Saxo Bank
Our new macro theme published by Saxo Bank chief economist Steen Jakobsen predicts a stronger USD as the Federal Reserve is moving closer to hiking rates; most inflation metrics followed by the Fed are either close to 2% or slightly above. 

The US labour market is also close to full employment, so further inflationary pressures should be on the horizon. 

In addition, employment growth looks robust and the US stock market is close to all-time highs. If this theme plays out as we think it will, it spells short-term opportunities on the short side in gold miners.

As a result we are initiating a short position in gold miners through the most liquid ETF – VanEck Vectors Gold Miners ETF (GDX:arcx).


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Source: Saxo Bank 

Gold has gained strength this year as investors sought protection against correlated assets but also as the ultimate safe-haven against what looks like extended valuation across many different asset classes. 

But a strong underlying force among investors is the hunt for yields, which could again hurt gold as the asset has a negative carry dragging down portfolios with already low indicated yields.


Entry: sell at market.

Stop: $31.50.

Target: $25.

— Edited by Michael McKenna

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Non-independent investment research disclaimer applies. Read more
23 August
Feders Feders
Hello Peter, what is the time horizon for this trade view? Thanks!
23 August
Ole Hansen Ole Hansen
Option interest on GLD, the world's largest gold ETF almost entirely focusing on calls. During the past five days 9 out of the 10 most traded options strikes were calls. Either a good reverse indicator or another sign how strong the underlying sentiment is.
23 August
Market Predator Market Predator
@Mr. Ole Hansen: does Your squawk mean, to be short gold miners might be premature?
24 August
Ole Hansen Ole Hansen
@Market Predator: NO is the short answer. This from latest gold update: The options market, seen through the lens of the SPDR Gold Trust (GLD), the world's largest gold ETF, sways heavily towards the bull camp. During the past week nine out of the ten most traded options strikes on GLD were calls. This could be a reflection of the current stalemate and rising correction risk in the market. Investors are therefore using options to have the exposure should it pop higher while at the same time maintaining the opportunity of picking up the ETF cheaper following a correction.
24 August
Market Predator Market Predator
@Ole Hansen: thanks for Your explanation, it's more clear now for me. Kind regards, MP.


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