Close X Cookies are necessary for the proper functioning of 24hGold.com. By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
EnglishFrench
Gold & Silver Prices in

Betting $1 Million On Gold Hitting $2,000 Before $1,000

IMG Auteur
Published : May 21st, 2012
276 words - Reading time : 0 - 1 minutes
( 0 vote, 0/5 )
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
0
comment
Our Newsletter...
FOLLOW : Gold
Category : GoldWire

 

 

 

 

With gold closing on $1,500, Peter Grandich recently reactivated his December 2011 bet that gold would hit $2,000 before it reached $1,000.

However, there is a flaw in the nature of the bet as it is possible for someone taking the bearish side of the bet to hedge themselves against any loss, nullifying what Mr Grandich is trying to achieve. The hedging strategy for the bear, assuming for simplicity the price at the time the bet is entered into is $1,500, is to buy 2,000 ounces at the time of the bet and then sell that gold when it first reaches either $1,000 or $2,000. Below are the cashflows for either outcome.



Of course the bear neither loses nor makes any money from the bet. The only risk they really take is reputational should they lose, but then they definitely benefit from a marketing exposure point of view (on the basis that any publicity is good publicity), from being respected for taking the bet, and also the chance they could win as well.

I would note that a bull could likewise hedge themselves by selling 2,000 ounces of gold and then later buying it back. However I am not accusing Mr Grandich of such a cynical marketing ploy, as I think it is clear he was/is willing to risk a real loss of his personal money on this bet, as evidenced by his December 30 post where indicated that he would assign his winnings to the many charities he is involved with.

So, I think it is back to the drawing board for the bulls to construct a bet that will really hurt (financially) a bear.

 

 

<< Previous article
Rate : Average note :0 (0 vote)
>> Next article
Comments closed
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
NY Fed President Wants Consumers to Tap Home Equity: Didn’t We Try ...
17 Augmikejuha
As a prudent investor, I eliminated all mortgage debt in January 2009. When I paid off my loan with Bank of America, they initially refused to tak...
Total Eclipse
19 AugThe Recusant
"I’d like to hear [sic] an argument..." Historical statues typically honor or remember people of greatness, the beneficial contribution th...
Can a government surplus cause the economy to tank?
18 Auggfs543
Your dissection is incisive, Steve. You weren't refuting just this one writer. You were beating up on popular Keynesian fallacies.
Can a government surplus cause the economy to tank?
17 AugDRGEORGE
Thank you very much for that Steve. But please just don't 'leave it there'. The author of that article apparently intends to expand on that bullshi...
Smoke and Fire
16 Augaccording0
some things happen without collusion do you think that the stupid little rats of blm and antifa dont get paid to help wreck our socie...
Smoke and Fire
16 Augaccording0
James. Even a believer has to leave Zoar before he starves to death. Kudos for having the fortitude to write this.
The Folly of Democratic Socialism
16 AugFalconflight
It this Amerika, I reference it as Krony Socialism.
Stock Market Correction Hasn’t Begun to Begin! It Will (And North K...
16 AugJ.
This bubble has been deemed TBTP (Too Big To Pop). Central banks have outright said in public that they will do "whatever it takes" to prevent it....
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS