Large investment funds are placing short positions with millions of ounces of open interest at the $10,000, $15,000, and $20,000/oz strikes, seemingly betting that gold will double or quadruple in value over the next few years. However, a deeper analysis is needed.

Isn't this considered a risky gamble?
These far-off strikes are often used for:
- Tail Risk Hedges
- Sovereign Risk Hedges
- USD Debasement Hedges
- Structured Products of investment banks
- Insurance against monetary regime change
Buyers may not actually expect gold to reach $20,000. A 1%-2% probability of this happening is enough to justify a small premium.
What is driving institutions to start buying these options?
- US public debt is outpacing #GDP growth.
- Global money supply #M2 is beginning to expand again.
- Central banks are buying gold at record rates.
- Asia is becoming a hub for physical gold hoarding.
- #Gold #ETF flows are returning after years of withdrawals.
A segment of institutions are beginning to invest in hedging against scenarios that were considered absurd just a few years ago.
Just like in 2019, very few people bought $100,000 Bitcoin options.
By 2021, it's no longer a far-fetched idea.