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-- lower that's part of the reason it's down with a precious metal now down 13% so far this year.
Now we have -- who says the recent trouble ain't nothing yet it is just the beginning and he is warning investors about big price plunge.
Very soon joining us now.
Is -- fund about.
Lakshmi capital managing director -- good to see you again thanks very much exist so it's it's bad enough as it is but you say it's going for the first of all before we get to your price target what is directing the price of gold now in the past it would support the dollar what the Fed did.
What do you think is driving.
Well ETF holders as you just mentioned have liquidated -- twelve million ounces of gold so far this year.
That sounds like quite a bit and it is the problem is -- fifty million ounces have come in since 2008.
So these holders who have been allocated to gold over the long term are now finding.
That they don't really want it and I believe the reason is because over the last one and a half and two years.
School hasn't protected them from anything you know what stocks up stocks down.
Dollar up dollar downed golden it's been going down the whole time so it's just it's it's become very unclear why someone -- -- -- so because of that you think the price of gold is gonna go back to what it cost to get it out of the ground right -- about what it between 800000.
Dollars an -- probably less than that probably somewhere between 40800.
So you think it could go down as low was -- we have seen those prices in years read -- well in the long run every commodity must return to its you know cost production and -- cost production is much much lower than where it is right now you know how soon would that -- -- how long would it take first of all to get it down with thousands.
Well I I think it'll be below a thousand announcement that the next one to two years I think you know this this liquidation trends going on the TS it looks unlikely to end soon just yesterday.
Almost half a million ounces came at a gold and that's with gold actually up on the day.
Even since Gordon bottom and rallied almost 10%.
Almost every day holders have been taking money out of now very often the price of gold.
Portends the price of gold portends.
Something else like it pretends -- a bit that -- what's happening with the stock market what's happening with the dollar.
The last time goal was it a thousand dollars an ounce that was it works 2009%.
Was at the lowest point of the doubt when it was half of what it is now right.
Could it -- falling price of gold pretend say a fall in the stock market.
It absolutely could in the sense that falling price of gold could mean deflation and deflation is obviously very bad effort debtor countries like the United States -- as -- -- it over indebted corporates.
So yeah it definitely could.
In this sense I'm not sure I think precious metals here kinda have a little mind of their own.
Like we talked over the last one and a half in two years no matter the macro environment no matter what's going on you know whether it's.
Cypress you know the bank deposits or whether it's very bullish news like good earnings news.
School this fall and all straight through that OK other than selling the go if if you believe that in your faces is going down -- thousand lower.
Other than selling the gold you have now how do you play this.
We're buying puts on the GOP which is ETF on gold but pretty long dated subjects playing by the way how these long dated puts work.
Well located just meaning that there's a long time to expiration -- January 2015 is the longest you can go that's twenty months from today.
And the thing it's -- volatilities of the price you're paying for protection is actually fairly low.
On gold at what that means is that people are very scared they think Golden's going to even out and and it'll be pretty well.
So you can actually purchase those put options at a fairly attractive price meaning the 21% implied volatility could well for the past six months you've been dead on so well let's see if you're right.
-- fund of all good to see it thank you very much they liked me capital appreciated.
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