Tuesday, September 23, 2008
Rebalancing The Twins
The first short position on oil was at US$139 (June 8, 2008), the double up position was taken at US$119.90 (August 5, 2008). The shorts were covered at US$112.90.
New positions (August 19, 2008)
Long oil futures $113.20
Long gold futures $802
The time has come to neutralise the oil position and take a small gain there. While I was bullish on oil, it was too much linked to the movements in USD.
I am very bearish on USD but I am more bearish on the destruction of demand from recent events. The liquidity injections from various central banks are good, but may not push oil past the US$115-120 region.
Sell oil futures $117.80 (gain 4.7%)
However I would be doubling up on Gold exposure. The destruction of wealth, and the reinjection of tons of liquidity by all central banks will stoke inflationary pressures again. In particular I am very much keen to be in real assets in this kind of era. I believe gold can even break US$1,000 this year and is headed for higher grounds. Key words, real assets.
Long gold futures US$900.60
(Double Long position in Gold with average price 900.6 + 802/2 -= US$851.30)
p/s photos: Pace Wu Pei Ci