Free Money: June 19th

Today Bernanke stated that the Fed may consider scaling back the buying of bonds.  He made it clear that this was a long term plan and for the time being nothing would change.  The markets, of course, draw their own conclusions.  If the Fed stops buying bonds then the interest rate on them will go up making them more attractive to investors.  This means they will drop gold to get bonds.  Gold opened today at US$1365 an ounce.   I have taken a two contract position which in both cases pay off if gold is under $1360 on July 1st.  The reason for the split is, again, the slippage that occurs on this small market.  These were the largest positions I could get within the price range I wanted to pay.

Gold price to be greater than or equal to US$1,300 and less than US$1,360 on 1 July 2013

+70 (Long) Avg. Cost: $0.5554.
Total Cost: $38.878
London Fix AM Gold price to be greater than or equal to US$1,360 and less than US$1,420 on 1 July 2013

-25 (Short) Avg. Cost $0.360.  Total Refundable Cost (to cover largest possible loss): $16.00

Total asset investment: NZD$54.878.  Cash Remaining: NZD$156.89.

 

Please type what you think and why.