Gold (GLD) and Rangold Resources (GOLD)

I am bullish on gold long-term.  I don't think we're in a deflationary environment and I believe all this money printing by Obama administration will eventually show up in prices of common household items, food and other non-discretionary names.  That is, I expect rising inflation as the administration tries to inflate their way out of this recession.  


I also think the recent run-up in US dollar is nothing more than a dead cat bounce as perceptions are starting to surface that the Fed may very soon start withdrawing some liquidity measures that were put in place during the crisis.  With unemployment at 10% and still rising (albeit slower pace) and housing market still deteriorating, I just don't see how the Fed could suddenly change its lenient monetary policy.  I expect US dollar to resume its downward slide after this brief correction. 


It also wouldn't surprise me to see that as US dollar resumes its downward slide, more emerging markets join in along with India to diversify a portion of their foreign exchange reserves into gold.   


Fundamentally, all this is bullish for commodities.  From technical side, attached here is a long-term weekly chart of GLD.  After breaking above the converging triangle in Oct'09, GLD was off to the races and now have retraced and settled back around $107.  Despite the recent sell-off, the long-term rising trend line is fully intact.  I am watching area $103-105 and as long as this area holds, the rising trend is still intact.  


Now, lets look at the long-term weekly chart of Rangold Resources with symbol GOLD (not to be confused with GLD which is the commodity ETF).  There is a beautiful long-term rising support trend line fully intact since Oct of 2008, and today the stock closed right at this support line.  As in the past, I expect a bounce from here, but as a trader you have to be nimble because if the stock breaks down below $70 support, all bets are off.  


So, given my bullish outlook, and Rangold and the commodity itself near or at rising long-term support line, I think now is the time to play some bullish option trade.  I like the following trades:


GLD Vertical Bull Spread:
- Buy to open March $108 strike calls
- Sell to open March $112 strike calls, for a net debit of $1.50


GOLD Bull Put Spread:
- Buy to open March $65 strike puts
- Sell to open March $70 strike puts, for a net credit of $1.85


The P&L charts of both trades are attached. Just a quick note, my long-term followers know that most of the time I try to do option trades that benefit from time decay, i.e. trades have position Theta.  That's true, but the reason I am interested in doing a vertical bull spread for GLD above is because gold volatility which goes by symbol GVZ is at near all-time low.  Buying options to bet on a directional trade on gold is as cheap as it could be in last two years (see attached GVZ chart for reference).  


Good luck!