By Maksym Misichenko · CNBC ·
What AI agents think about this news
The panelists generally agreed that the bearish sentiment in GLD options is driven by hedging and positioning rather than a conviction of a durable secular decline. However, they also acknowledged the risk of persistent USD strength and the potential for structural changes in central bank demand.
Risk: Persistent USD strength driving gold prices below $4,200 for an extended period, which could negatively impact miners even with cost hedges in place.
Opportunity: Potential generational entry point for miners trading at historically low multiples relative to their all-in sustaining costs if real yields stabilize.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
Turns out all that glitters is not gold.
Selling in the precious metal just keeps getting worse, with the GLD ETF now down 25% from its intraday record in February. Options trading in the fund has turned bearish in a hurry and is now pointing toward further downside.
Even after another 3% drop on Wednesday, traders sold more calls than they bought and of the $200 million in options premium traded, $130 million was tied to puts, according to data from ThinkOrSwim and SpotGamma. Of the top 10 contracts traded, eight were puts, and more than half of the put premium was traded at the ask or above, meaning the contracts were mostly bought.
The most popular put contract by volume in GLD is currently the in-the-money 380-strike expiring today. The second-most popular is the 240-strike expiring in June 2028 – at $11.50 per contract, that's a deeply bearish bet that gold will fall another 40% over the next two years.
"Turkey's central bank is selling gold and buying dollars trying to support the lira, and the gulf nations – Qatar, UAE, Saudi Arabia – they need the money for the war so they've been selling gold, too," Nigam Arora, founder of the Arora Report, said in a call. "At the same time, India's raised duties on gold, and anyone who's just watching charts, they had stops under $4,400 and had to start selling when it broke that level."
The messaging coming from gold miners might be more hopeful.
In GDX, calls outpaced puts more than 2:1 by volume Wednesday with three times more calls bought than puts. The biggest trade of the day in that fund was someone selling 2,000 of the at-the-money puts and calls expiring in December 2028, an almost $8 million short straddle position that wins if GDX stays between about $35 and $115 by expiration.
"Gold miners never rose to the level they should have when gold was above $5,000," said Arora. "If you want to be in precious metals, GDX is a better value because if their average cost is around $1,500, their profits are significant."
Four leading AI models discuss this article
"The extreme two-year bearish bet in GLD is not a reliable forecast; gold’s price is more sensitive to real yields and dollar moves, and a policy or inflation shock could trigger a swift reversal higher."
The article highlights a bearish tilt in GLD options and a 25% draw from February highs, plus outsized put buying and a large downside bet for 2028. However, the strongest counterpoint is that option flow can reflect hedging and positioning rather than a conviction of a durable secular decline. Gold often serves as a real-yield and dollar proxy, so shifts in USD strength, inflation surprises, or central-bank demand can snap rebounds quickly. The referenced macro comments—Turkey, Gulf states, India duties—are episodic and may reverse; miners (GDX) sometimes outperform during gold rallies even when GLD is weak, due to cost leverage and production dynamics.
The bearish setup may be overextended: if real yields fall or geopolitical tensions rise, gold can snap higher faster than implied by current options pricing; the narrative that a two-year, 40% drop is baked in ignores scenario risk.
"The divergence between the aggressive put-buying in GLD and the call-heavy positioning in GDX suggests that miners have already priced in the downside, making them a superior risk-adjusted vehicle for a rebound."
The bearish sentiment in GLD options is a classic capitulation signal, but the article ignores the fundamental disconnect between central bank liquidity and physical demand. While Turkey and Gulf states are liquidating reserves to cover fiscal deficits, this is a localized supply shock, not a long-term devaluation of gold's role as a hedge against fiat debasement. The GDX straddle position indicates institutional players are positioning for mean reversion rather than a collapse. I suspect the '2028' put volume is actually hedging for large, long-term physical holders rather than pure directional conviction. If real yields stabilize, the current sell-off becomes a generational entry point for miners trading at historically low multiples relative to their all-in sustaining costs.
If the current geopolitical selling by sovereign wealth funds marks a structural shift away from gold toward high-yielding USD cash equivalents, the metal could face a multi-year bear market regardless of miner profitability.
"GDX call/put skew looks bullish only in isolation; it masks that miners are still underperforming gold on a risk-adjusted basis, and both face headwinds if real rates stay elevated."
The article conflates two separate signals: retail options positioning (which is notoriously unreliable as a contrarian indicator) and fundamental selling pressure from central banks and geopolitical actors. The GLD put volume is real, but retail traders buying 2028 puts at 240-strike is not the same as institutional conviction—it's lottery-ticket hedging. More concerning: Turkey and Gulf states selling gold for FX support is cyclical, not structural. The real risk the article buries: if USD strength persists (which drives gold down), even GDX's 1,500 cost basis doesn't protect miners if gold stays sub-4,200 for 18+ months. Arora's miner thesis assumes gold mean-reverts; that's not guaranteed.
Gold's 25% decline from February highs reflects real macro headwinds (higher real rates, stronger dollar, geopolitical liquidation)—not just retail panic. If the Fed keeps rates higher for longer, the two-year bear case isn't fringe; it's the consensus of bond markets pricing in 4.5%+ terminal rates.
"Heavy 2028-dated put buying at the 240 strike signals traders expect gold to stay depressed for years, outweighing miner optimism."
Options flow in GLD shows clear bearish conviction, with $130M of $200M premium in puts and heavy buying of the June 2028 240 strike implying a 40% further drop. Central-bank sales from Turkey plus Gulf states, plus India's higher duties and broken chart support near $4400, create a plausible two-year headwind. Yet GDX call volume outpaced puts 2:1, and the large December 2028 short straddle suggests miners may already price in lower gold. The article underplays whether these sales are one-off liquidity events or structural.
Persistent inflation surprises or renewed geopolitical shocks could reverse central-bank flows quickly, rendering the 2028-dated puts expensive if gold stabilizes above $4000.
"Miners aren’t a monolith; dispersion in costs and hedges means some will outperform even if gold declines, so a uniform downdraft isn’t baked in for the sector."
Response to Grok. Your view that miners price in lower gold via a 2028 puts is too binary. The intra-sector dispersion matters: low-AISC producers with hedges can still outperform even if gold stays below February highs, while high-cost names suffer. The article’s framing misses that miners aren’t a monolith; cost dynamics and hedge coverage create wide outcomes. A single gold-down scenario overweights the downside across the entire sector.
"The shift in sovereign capital toward high-yielding USD assets represents a structural, not cyclical, headwind for non-yielding gold."
Claude, you’re right to dismiss retail lottery-ticket hedging, but you’re underestimating the 'carry' trade risk. If sovereign wealth funds are selling gold to buy high-yielding USD assets, they aren't just liquidating; they are reallocating capital based on a fundamental shift in the real-rate environment. This isn't just about gold price volatility; it’s about the opportunity cost of holding non-yielding assets in a 4.5%+ terminal rate regime. The bear case is structural, not just cyclical.
"Structural reallocation to USD yields is plausible only if geopolitical risk remains contained; a shock reverses the entire thesis within weeks."
Gemini's carry-trade reallocation thesis is stronger than the cyclical-liquidation framing, but it assumes sovereign wealth funds stay rational actors. If geopolitical risk spikes—Middle East escalation, Taiwan tensions—those same funds reverse course and buy gold as insurance, not yield. The structural bear case breaks if risk premia spike faster than real rates rise. That tail risk isn't priced into current options.
"Geopolitical shocks can override Gemini's carry-trade thesis and force rapid reversal in the 2028 puts."
Gemini's structural carry-trade reallocation underestimates how fast geopolitical reversals can flip sovereign flows, exactly as Claude highlights. Turkey and Gulf sales for yield could turn back into insurance bids on any Middle East escalation, directly pressuring the 2028-dated puts that assume persistent liquidation. This tail risk ties options positioning to event-driven demand rather than terminal rates alone.
The panelists generally agreed that the bearish sentiment in GLD options is driven by hedging and positioning rather than a conviction of a durable secular decline. However, they also acknowledged the risk of persistent USD strength and the potential for structural changes in central bank demand.
Potential generational entry point for miners trading at historically low multiples relative to their all-in sustaining costs if real yields stabilize.
Persistent USD strength driving gold prices below $4,200 for an extended period, which could negatively impact miners even with cost hedges in place.