The price of gold is currently struggling. The precious metal is trapped in a consolidation formation. But while many investors are currently rather frustrated whether this consolidation, which has already lasted two and a half months, a trader or institutional investor in New York is betting on a sharp rise in the price of gold. This is reported by the news agency Bloomberg.
According to this, there was a $1.75 million block trade in New York yesterday at noon, in which someone purchased gold purchase options. These options give the holder the right to purchase gold at a price of $4,000 within the next 18 months, until June 2021 to be precise. Currently, such an option costs $3.50 on the futures market. In other words, someone is betting millions that gold could triple in the next 18 months. “They are speculating on a fast, strong rise,” Tai Wong, Head of metals derivatives trading at BMO Capital Markets, told Bloomberg in an email. Even though $1.75 million doesn’t sound like much money to an institutional investor at first glance, for such an extraordinary, perhaps crazy bet, it’s an enormous sum of money that New York is astonished to see.
Of course, this is really an extremely speculative investment and we won’t know who the buyer or buyers are – unless, of course, you make a film about it in a few years like “The big short”. Nevertheless, this example shows that Wall Street is very much interested in gold and that some people are expecting a bigger movement in the precious metal. In the short term, however, it is important for gold to end its consolidation and start the next upward movement. Today New York is closed due to Thanksgiving, by the way, tomorrow, on Black Friday, a shortened trade takes place. But perhaps Black Friday actually offers the opportunity to get a bargain on gold, which pays off in a few months.