As gold’s tumble continues, traders bet the pain may last for two more years
Turns out all that glitters isn’t gold.
Precious metal sales are getting worse GLD ETF it is now 25% below its February intraday record. Options trading in the fund quickly turned bearish and is now pointing to a further downtrend.
Even after another 3% decline on Wednesday, traders sold more puts than they bought, with $130 million of the $200 million in option premium traded tied to puts, according to data from ThinkOrSwim and SpotGamma. Eight of the 10 most traded contracts were puts, and more than half of the put premium was traded at or above the put, meaning the contracts were mostly bought.
The most popular put contract by volume on GLD is currently the in-the-money 380 strike that expires today. The second most popular is 240 innings, which expires in June 2028; $11.50 per contract; This is a very bearish bet that gold will fall another 40% over the next two years.
SPDR Gold Shares, GLD
“Turkey’s central bank is selling gold and buying dollars to support the lira, and the Gulf countries (Qatar, UAE, Saudi Arabia) need money for the war, so they are selling gold,” Nigam Arora, founder of Arora Report, said in a phone interview. he said. “It also increased taxes on India’s gold and anyone just watching the charts saw stops below $4,400 and had to start selling when it broke that level.”
Messages from gold miners may be more hopeful.
On GDX, calls outpaced puts by more than 2:1 in volume on Wednesday, with more than three times as many calls as puts. The day’s biggest trade in this fund was someone selling 2,000 puts and calls expiring in December 2028; This is two short positions worth almost $8 million that win if GDX stays between about $35 and $115 until expiration.
“Gold miners never got to the level they should have when gold was above $5,000,” Arora said. “If you want to be in precious metals, GDX is a better value because with its average cost around $1,500, its profits are significant.”
