Which makes puts on GLD cheap. Checking Portfolio Armor ( http://portfolioarmor.... ) the cost of buying protection against a greater than 20% drop in the price of GLD over the next six months using the optimal put option contracts was about 1.1% of the position value. That's about how cheap SPY puts were back when all was bullish toward the end of March ( http://steamcatapult.c... ).

Will the bull market in gold (and GLD) continue to new highs? Probably. But I think there's a good chance it will take a breather within the next six months. There doesn't seem to be much inflationary pressure out there, with the prices of industrial commodities such as copper and oil weakening recently, and persistently high unemployment ( making wage and price spirals decidedly unlikely).

Recall that when it took a breather around the new year, we made a few dollars buying puts on it ( http://shortscreen.com... ).

I used Portfolio Armor to determine the optimal put options to protect against a greater-than-12% decline in GLD today ( the $109 strike Dec 10 puts) and bought a few today at $4 each.

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