This Week in Gold and Oil Volatility – 12/20/2013

The gold market has kept traders on their toes in 2013.  That is a generous understatement.  This past week, specifically on Thursday, the SPDR Gold Shares ETF (GLD – 115.94) traded as low as 114.50 which is a new intraday low for 2013.  What was interesting to watch was the reaction of the CBOE Gold Volatility Index (GVZ – 21.01) while GLD was testing the 2013 low.  The index was higher, but not in a panic type fashion.  This lack of concern showing up in GVZ turned out to be a good call as GLD held support.  For the moment the volatility market believes GLD is going to stick above the 114 – 115 level.

I admit that I spend too much time focusing on the markets.  You are a lucky person when your hobby is also your profession.  The result of focusing too much on the financial markets is that you tend to personify different markets.  In 2013 the CBOE Oil Volatility Index (OVX – 15.86) has been my red headed step child of volatility indexes.  I have given OVX no love whatsoever in this space.  But with GLD dominating the headlines it was tough to fit in the time OVX probably needed and deserved.  I decided to check in on OVX and on Friday the index close at an all-time low and it is 44% lower than where it began 2013.  I’ve heard from oil traders that 2013 has been a tough year due to a lack of volatility.  For their sake, I hope that OVX will return to the long term average (since 2007) in the mid-30’s.

GVZ OVX