Record low volatility = record low interest?

[vand]

Interesting article... We're currently seeing record low volatility in the precious metals:

http://www.marketoracle.co.uk/Article61799.html

It won't stay this calm forever.. and when the price finally wakes up there will likely be a much bigger move to compensate.

 

 

Anyone thinking about buying some cheap options?

[Pipers]

Do you hold Juniors @vand.  

This article is very interesting.  It suggests a big move up or down esp in Gold, IMO in the long term gold is under valued but silver is more so.  I can see silver moving extremely quickly as investors try to jump on board.  

 

[sixgun]

You may know all this but i will post it for others.

There is a Gold Volatility Index, the GVZ. This is calculated in the same way as the VIX is calculated off the S&P index. The GVZ uses the GLD ETF's. There are options on this index. i have traded options on the VIX but never the GVZ. i would not advise anyone to trade options in volatility products unless they really know what they are doing.

You can buy/sell options in gold futures GC. i have done this quite a few times. Most futures contracts are quite large and this goes for gold - it is 100oz so something like $135 000. If you bought CALL options and gold shot up you could make many times your stake. The thing is options have a life and we do not know when gold will shoot up so you could be buying options which expire worthless, indeed you are more likely than not to buy options which expire worth less than you paid. i sell options which generally makes money but then you are open to much more risk and you need a decent grasp of what you are doing or you could end up blowing up your account especially in the futures market.

[KDave]

I think a break to the downside is most likely, low volatility now would mean a large move, and the ta I have seen we are talking a couple hundred USD lower in gold over the next few months. Silver as well, big moves down. No one really knows. 

[vand]

18 hours ago, KDave said:

I think a break to the downside is most likely, low volatility now would mean a large move, and the ta I have seen we are talking a couple hundred USD lower in gold over the next few months. Silver as well, big moves down. No one really knows. 

If we were talking about risk-on assets like stocks, I would agree, but I tend to think the opposite is much more likely with a defensive asset like PMs.

The low volatility is a reflection of complacency and disinterest, symptomatic of a low.