Jeffrey Gundlach of Doubleline has been talking about dollar declining, so is Paul Tudor Jones… to everyone. Separately, many countries have accelerated buying Gold, and Silver since US froze Russian assets. Foreign reserve buying of UST are declining and EU investors have taken money out, so is South Korea and Japan.
The dollar index DXY has come down from 110 (jan-05-2025) to 98.37. Many are predicting it could decline by another 10%. So here are some of the trades I am doing on this thesis
Precious Metal, Silver synthetic call Jul $29, Jan 26 $30, Aug $40~$47 spread
Looking at Gold, so far no trade (Still feeling bad on closing my gold trade last year)
FXI July $37 synthetic calls; Looking at additional trades
Silver is slowly moving up, the Gold, silver ratio had declined as gold moved up 50% last year and in general. There is a chance Silver melting up similar to 2011, so Here is a cheap play on Silver…
Buy Aug $40 and Sell Aug $47 for $0.15 debit. For 20 contracts you will pay just $300 + commissions and has potential upside of $14,000. You don’t need silver to get to $47, even a few $$ higher move from here will give outsized return. If not, you are not going to lose more than $325 at the max and you can close the trade much earlier.
As foreigners started reducing their treasury holdings, Gold as reserves went up and Gold prices went up by 50% last year. We may not get similar move but there is a good chance that gold moves up to $400, then $200. Especially in a US recession when US government increases its spending, dollar decline will accelerate and Gold will outperform even more.
