Our markets remain range bound ahead of tomorrow’s midterm elections.
Some of the Wall Street Gold traders I spoke with this morning indicated that ahead of tomorrow night’s election results they will be looking at short term Gold and Silver options.
They indicated that they would be looking at buying short term puts and calls hoping to cash in on a strong move in volatility in either direction after the poll results are in.
A dislocation in the Gold and Silver volatility could occur when the news is released and could offset the premium they pay on their losing side and make significant profits on their winning side. But this strategy can backfire on the traders if the market doesn’t move at all. Worst of all, they know what their risks will be, just the cost of their premium investments.
I imagine that they would be probably buying calls over puts, or going a little more heavily on the call side.
Other News From Around The Globe
As we have reported in the past, the financial situation in Italy continues to deteriorate. Just this past week JPMorgan Chase CEO Jamie Diamond shared his thoughts on a potential financial crisis in Italy and other ongoing European negotiations regarding the Brexit negotiations. He said, “The long term health of Europe is important for the whole world.”
There are two obvious concerns that plague the region: the fallout from highly contested Brexit negotiations between the UK and the European Union, and Italy’s hostile disagreement over their budget with their European counterparts in Brussels.
One must remember that Italy is Europe’s third largest economy and anything that goes wrong there could have a significant impact on the World Financial Markets.
Unsurprisingly, these two issues in the future, especially Italy’s problems, could significantly impact the price of Gold.
We will be watching for any further developments in the region.
Have a wonderful Monday.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.