Although the chart is tough to read, it compares Anglo Gold (AU) to the Gold ETF (GLD) through last Friday.
On February 10th I blogged that I swapped AU for GLD share for share to reduce volatility and to reduce exposure. I sold AU at an average price of $58.40 and bought GLD at an average price of $54.80.
I did not expect that the two would diverge in this manner so quickly.
In that first post about this trade I noted that after a big run I wanted to just lighten up a little. I certainly was not early in calling a short term top. The focus of this should be that AU (and all the miners) had a good run and rightly or wrongly I thought cutting back might make sense.
The trade was a tweak not a big bet. Longtime readers know I don't trade a lot but actively managing your portfolio means you may need to make changes every now and then.
4 comments:
Why the switch from AU to GLD? Is there really that much of a difference holding mining shares and physical metal? I thought when the price of gold goes up both forms of holdings go up equally. Please elaborate.
The Chinese will not buy the shares.
I was on the other side of the trade. Bought AU today after looking at the stochastics and MA, MACD charts. Bernie Shaeffer likes AU because there are a lot of shorts and options plays that may have to be reversed if it starts taking off as I expect.
I still own all my GLD and AUY however. I'm hogging the gold stocks and some metals stocks in anticipation of a sizeable general market blow off. Think Silver is in for a short term pull back and then onward to an eventual parabola before too long.
http://www.house.gov/paul/congrec/congrec2006/cr021506.htm
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