I went ahead and sold the SPDR Gold Trust (NYSE: GLD) January 2010 GLD 120 call options for a gain of 157% in under 3 weeks. I had gone long on the GLD call options at a premium of $107 per contract and I sold the call options today at a premium of $275 per contract.
I do think that the price of gold is going to appreciate further. But I also expect a small retracement in the interim period. When that retracement comes, I am going to get in again with a long position. As long at the USD FOREX is trading lower against all the other currencies, gold bullion is going to remain strong. So, it is a two-pronged attack — go short on the USD FOREX trades and go long on Gold.
I think gold reached a 52-week high today (but I am not checking).
Here is an interesting article from an expert of the relationship between USD FOREX and Gold.
As things stand now, this will be te strategy for some time at least.
P.S. I am running out of gold picture ideas, so I may start recycling some old images!
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