Gold fan bets on the crash

A daring speculator has made a bet on spectacularly rising prices on the gold options market, reports the news agency Bloomberg. The buyer apparently expects a fairly unprecedented crisis in the financial markets – and very soon.

The crash is coming! One player in the gold market seems so convinced that he is betting $1.75 million that the gold price will rise to $4,000 by June 2021. The call options were sold for 3.50 dollars. That would be a lonely record and more than twice as much as the recent record high. Currently, the price for a fine ounce of 31.1 grams is around $1,450.

 

Gold is often bought in times of crisis and is therefore regarded as an insurance against market turbulence in investors’ portfolios. As soon as the risks on the market diminish again or are assessed differently, demand for gold usually weakens again.

The gold price of 4,000 dollars would probably mean that the financial markets are in the process of dissolving – or about to dissolve. However, it should also be borne in mind that $1.75 million is no more than small change given the billions being moved around the financial markets.

One can only speculate about the motives, too. Perhaps the buyer just wanted to make sure that the mood would again turn in favour of the precious metal?

 

Where could the journey take us?  

In recent weeks, the gold price had lost its momentum after climbing above the 1,500 dollar mark in September due to the political turmoil surrounding Brexit and the trade war and the fear of a global recession. Some friends of the precious metal were already dreaming of the record high of 2011 when one troy ounce of gold cost more than $1,900.

Helaba’s market observers still see potential for the gold price in the coming year, but the forecast is far from a price of 4,000 dollars: “Gold is no longer in demand as an inflation hedge, but it is very much in demand as a hedge against political risks.

 

These result from a structurally too expansive orientation of monetary policy,” the experts say. “In the course of the year, the precious metal is likely to celebrate further successes and rise to 1,700 US dollars per ounce.