Trade Alert: FXY

By Stephen Leeb • June 6, 2017

Buy to open the CurrencyShares Japanese Yen Trust (FXY) July 21, 2017 $90 call option. Pay no more than 55 cents per contract.

This is not an indicator-driven trade as we do not have a yen indicator, at least not yet. This is a hedge against our open December 15, 2017 $23 put option trade against the VanEck Vectors Gold Miners ETF (GDX).

They don’t always follow each other, but over the past three months gold and the yen have tracked themselves quite closely (see chart).

Concerns over investigations surrounding President Trump and his allies have sparked some flight to safety in precious metals. However, our gold stock indicator is still bearish and warrants us staying with the GDX put despite today’s gold and miners rally.

We think opening a call on the yen to hedge against the GDX put makes sense at this point. The shorter-dated FXY call, given the close correlation between gold and yen at this time, will give us a chance to offset potential paper loss in the GDX put if gold and gold stocks continue to exhibit strength.

This could be only a two or three day trade, perhaps even shorter. Stay tuned.

This trade is rated high risk as it could expire worthless if our expectations are not met.

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About The Author

Bio | Archive

Stephen Leeb, Ph.D. is the Chief Investment Strategist of The Complete Investor and Real World Investing.

Dr. Leeb’s books have been notable for predicting the secular bull market that started in the 1980s (Getting in on the Ground Floor, Putnam, 1986); the tech stock crash and rise of real assets, including oil and gold (Defying the Market: Profiting in the Turbulent Post-Technology Market Boom, McGraw-Hill, 1999); and the surge in oil prices (The Oil Factor: Protect Yourself and Profit from the Coming Energy Crisis, Warner Books, 2004). His national bestseller, The Coming Economic Collapse: How You Can Thrive When Oil Costs $200 a Barrel (Warner Books, 2006), co-authored with Glen Strathy, outlined the biggest challenges facing the US economy, and accurately predicted the 2008 sub prime mortgage crisis as well as the vicious subsequent economic cycle requiring massive infusions of government stimulus, near zero interest rates and much higher federal debt levels. Game Over: How You Can Prosper in a Shattered Economy (Business Plus, 2009) predicted a permanent peak in global commodity production. Dr. Leeb’s eighth and latest book, Red Alert (Hachette, 2011), outlined China’s growing prosperity and the ways in which its demands on increasingly scarce resources threaten the American way of life.

Among his many speaking engagements, he has been the keynote speaker at both a JPMorgan Chase energy conference and a Royal Bank of Canada commodities conference.

Dr. Leeb received his bachelor’s degree in Economics from the University of Pennsylvania’s Wharton School of Business. He then earned his master’s degree in Mathematics and Ph.D. in Psychology from the University of Illinois in just three years, an academic record that stands to date. He is frequently quoted in the financial media, including Investors Business Daily, USA Today, Business Week, The New York Times, NPR and The Wall Street Journal. In addition, Dr. Leeb is a regular guest on Fox News, Bloomberg, CNN and Neil Cavuto.