This is funny, both up!: HGD Up now $1, and HBU up $80. Kind of strange but as planned!

Thanks for the analysis on my idea. Good thing i did not go for that strategy

However i have gone for the second strategy buying both HBU and HGD. One linked to Comex price, the other bearish on Canadian Gold stocks. Im pleased that Canadian gold mining stocks were more cautious today after the Friday crazy 20-30% price hikes for ABX and others. Today even though gold is up on average $30USD, ABX is only minimally up. In fact i just checked ABX and its down a few cents now!

Okay Im down $80 on the HGD (500segs), and up $100 on the HBU (300segs).

I have been watching the same tale evolving which you have brought to attention.It is odd! Something seems out of kilter especially when XGD is brought into the equation. Buying put options on XGD did produce a nice trading profit and an actual hedge against a long position.One would have to believe the opposite will occur seamlessly on the up side.

The horizon pair compared to it seems to have failed under all accounts:disappointing.No matter which was bought you were a loser and why short an equity that is assumed to have the short already built in? Puts and calls on XGD cost less and are far less risky. They have done what they are supposed to do. the same cannot be said of the other two even though there is vast liquidity in their trading.

It would be interesting to hear what Horizon has to say about what, I would view as, an abnormality in their products?

A final thought possibly due to the insane market conditions these movments are a sign of gridlock in HGU/HGD or neutrality! We must remember that there are three realms that isssues can be in up, down and neutral.

Its odd but I have a weird aversion to shorting, unless its purely as a hedge.However i noticed some weird price differential with both HGD and HGU.

HGD is at 4.71, so there is way more upside potential than downside. On the other hand HGU is at 7.76, which also does not have much downside available to it. My bet is that if one bought 500 shares of each, one comes out winning no matter what because of where their share price is currently.

If gold now skyrockets (HGU upside) then the most downside available for HGD is 0, which would mean a minimal loss, but overall a win because of HGU. However if gold sinks again then HGD skyrockets from its current level of 4.71, while HGU can only fall to 0.
Does that make sense or am i missing something?

mike, this question has been bothering me for some time as well….. let’s have a look at recent short term history….

(1) Suppose I had bought equal shares of HGD & HGU on August 1st……

DATE– AUG1 SEP9 SEP26 OCT24 NOV21

HGD.TO 10.82 16.96 10.45 15.37 4.71
HGU.TO 20.61 9.90 14.78 5.22 7.76
Total 31.43 26.86 25.23 20.59 12.47

This trade would have consistently lost money.

(2) Suppose I had bought roughly equal $$ amounts on August 1st……..

HGD.TO 21.64 33.92 20.90 30.74 9.42
HGU.TO 20.61 9.90 14.78 5.22 7.76
Total 42.25 43.82 35.68 35.96 17.18

Not much better…. but you can see that you need to overweight the “winning” side.
So, hedging short term with these two ETF’s has really virtually the same risks as stock picking…. which is, it seems that you have to be right on the direction, and overweight that side of the hedge. I have been looking at FXI and FXP in the same way……. hedging seems to be difficult to do.

On the other hand, if you had sold both of them short, you would be laughing….Odd, no???

Has anyone out there figured this out??? Please chime in.