On CNBC’s ‘Fast Money,’ the traders discussed on the prospects for investing in gold prices in the current market scenario and the performance of gold funds like Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ) and SPDR Gold Trust (ETF) (NYSEARCA:GLD).
Timothy Seymour, the Managing Partner of Triogem Asset Management and also a CNBC contributor, said that looking at the fund flows into gold and similar funds last week (Ex-: Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ) and SPDR Gold Trust (ETF) (NYSEARCA:GLD)), it can be seen that there is an increase in the AUM and also retail money is back into gold.
But he added that there are some budget-related factors in India, which is one of the major consumers of gold, like the possible import ban on gold or the 80-20 import ban and according to him looking at the global supplies, the fear from gold is not helpful.
“Ultimately, you are in place where I think gold is in a very vicious bear market rally, and I think it is dangerous place to be buying gold, I think it is a dangerous place to be buying gold miners,” Seymour said.
One of the traders said that gold is in a very tight spot right now. He said that till the end of last year, gold was very down, and it has been a one way trend this year with the Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ) is up 28%.
“You know, there was a trade in the options market today that really struck out because it was sizeable, somebody’s looking out to December and they bought 20,000 of the December 30-35 calls, for that breakeven is 10% away from here. So that person is committing a good bit of premium, but they don’t really probably want to own the underlying here, it’s kind of a leveraged trade. If you get that breakout, if you get the gold move to 1400, that trade is going to work.”
One of the other traders, Brian Kelly, who is the Founder and Managing Member of Brian Kelly Capital LLC, felt that it is more than just macroeconomics and in the case of India he said that as the Indian government did not lift the import ban on gold, there was a panic to buy gold in India which lifted up the prices this week.
He also added “I am long, and I think it goes higher.”
Kelly added that gold miners are doing what airlines did in the past i.e. learning to change their business and to run their business differently, which could be an inflection point.