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Bullion.Forum
Hedging gold in small quantities
- Thread starter Danielle
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element47
Well-known member
The cheapest way would be to short shares of GLD, would it not?
What is your estimation of how low gold will go? I have bought silver all the way up from $7 and have many kilos of it.
I only have 6.5 oz gold, all at about $1500. I am doing nothing wrt hedging.
I bought 2 oz Palladium today. Cana Maples. I don't know if you can even sell the stuff.
What is your estimation of how low gold will go? I have bought silver all the way up from $7 and have many kilos of it.
I only have 6.5 oz gold, all at about $1500. I am doing nothing wrt hedging.
I bought 2 oz Palladium today. Cana Maples. I don't know if you can even sell the stuff.
goldenchild
Well-known member
- Joined
- Aug 14, 2009
- Messages
- 1,810
I think you're looking at the best way to do so. If you're only looking for a few ounces here and there, make them. Do it right and you'll even get the gold under spot.
I copied this from the internet.
What Does Hedge Mean?
Making an investment to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting position in a related security, such as a futures contract.
An example of a hedge would be if you owned a stock, then sold a futures contract stating that you will sell your stock at a set price, therefore avoiding market fluctuations.
Investors use this strategy when they are unsure of what the market will do. A perfect hedge reduces your risk to nothing (except for the cost of the hedge).
Read more: http://www.investopedia.com/terms/h/hedge.asp#ixzz1YjtRNY5P
What Does Hedge Mean?
Making an investment to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting position in a related security, such as a futures contract.
An example of a hedge would be if you owned a stock, then sold a futures contract stating that you will sell your stock at a set price, therefore avoiding market fluctuations.
Investors use this strategy when they are unsure of what the market will do. A perfect hedge reduces your risk to nothing (except for the cost of the hedge).
Read more: http://www.investopedia.com/terms/h/hedge.asp#ixzz1YjtRNY5P
element47
Well-known member
Ten shares of GLD would hedge an ounce of gold pretty danged closely. At a discount broker it would cost you $7-$10 per side to put on and then take off the hedge. It could also be done in the futures market, but a GC contract represents 100 troy ounces of gold, which is going to be too big. The MINI contract that covered 50 oz of gold was discontinued. There is an e-micro contract that covers 10 oz gold. "MGC" is the symbol. These contracts could be cheaper to hedge with than two separate stock trades at $7 each. On the other hand, for the same $7 commission, you can buy (or short) 2, 20, 200, or 2000 shares of GLD. Whereas multiple CME contracts for either the GC contract or the e-micro will represent multiple "both-sides" commissions.
My vote would be for the GLD. Using short shares of GLD, you could also put on say a 30% short hedge against some physical gold. A 30% short hedge on 3 ounces of gold would be 9 or 10 short shares of GLD.
My vote would be for the GLD. Using short shares of GLD, you could also put on say a 30% short hedge against some physical gold. A 30% short hedge on 3 ounces of gold would be 9 or 10 short shares of GLD.
