Wednesday, September 29, 2010

Call Options Rising on SPDR Gold Trust (NYSEArca:GLD)

Quantitative easing by the Federal Reserve is a surety, and in response, an increasing number of call options being taken on SPDR Gold Trust (NYSEArca:GLD).

While it's not certain the exact way the Fed will acquire Treasury bonds, it doesn't matter, as the result will be the same: the debasing of the American dollar, which will drive up the price of gold.

There are many other reasons gold is going up, but among traders, quantitative easing is one that can give fast rise to the price of the yellow metal, while most other gold supports offer steady increase in the price of gold over a period of time.

SPDR has whetted the appetite of traders even more when they made a killing when it went from $123 to $126, and now they're positioned to take advantage of what appears to be another nice move up, as gold continues to shatter records on a consistent basis, with nothing in the short term to stop the rise.

There of course could be a temporary correction, but in general, the price of gold will continue to rise, and options will be taken out on the more predictable companies like SPDR.

The Gold Trust closed Tuesday at $127.85, up $1.23, or 0.89 percent.

SPDR increased it bullion holdings from 5.17 metric tons to 1,305.69 metric tons as of September 28.

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