Gold

[nickola.pazderic]

Thanks Paul, very interesting indeed.

The comparison between August and today in GDX/GLD shows, once again, that flux is the order of things. Moroever, we can no longer assume that GLD and GDX are not correlated.

I'm losing about 1.33% of my total risk portfolio on the GDX trade. Pascal gives a big hint that it might be called off by the open tomorrow. I'll trade another day. Steady as she goes...

There is a psychological dimension to this, which I cannot escape. It is this: while taking a robot position, I become myself a robot. I become one because the entries that it asks me to take are usually outside of my imagination, and I believe there is overwhelming and increasingly backtestable evidence to show they trade better than me.

All that said, I think I can improve on the robot in some ways. I learned a lesson from today. Namely: as the market opened in favor of our GDX position and thereafter, I kept an eye on GLD. It stayed about neutral. It did not go positive or negative. When the position began to deteriorate in GDX, a hedge of GLD,SLV or NUGT suggested themselves. I should develop an internal robot that might allow me to hedge against the robot trade when the forces seem aligned against it.