Monday, September 26, 2011

Alpha-D Update for 09/26/11

My GDX covered calls expired last Friday, which did not surprise me.  What did surprise me was the collapse in the value of GDX thanks to huge selling pressure in gold bullion.  The blogosphere is pointing to raised margin requirements on the CME as the likely culprit, which makes some sense if  traders with big gold positions had to liquidate some gold to cover margin calls.

This is why I've renewed my covered calls to expire next month rather than at the end of this week.  I believe gold will retrace its climb upward as long as Fed policy is holding interest rates near zero, so I need to allow more time for the climb back up to reach the calls' strike price.  Trouble in the eurozone is definitely making the U.S. dollar look more attractive than gold as a temporary store of value, so gold's retreat from its record highs may not be finished yet. 

I made no other changes to my Alpha-D portfolio.