Monday, 5 December 2011

Gold vs Index Basis Widens Up

The chart above should really speak volumes to even the most unobservant investor.
We expect the FTSE-Gold basis (difference) to narrow - i.e. mean reversion. Limited downside, healthy upside, this would be a no brainer if we could trade. Expect real money back on the table by Wednesday.
P.S. Plenty of other reasons to be long Gold (funds opting for physical delivery, exposure to a number of QEs etc), covered over and over again on this blog, make this trade a runner even in the medium term.

***EDIT*** To those that took this trade: congratulations. The basis has closed up nicely.
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