To The Moon

While economic uncertainty and geopolitical chaos have reignited investment demand, the debate over gold's role in global financial markets is still far from over. While gold is recognized as a Tier 1 asset under Basel III, it is still not recognized as a High Quality Liquid Asset (HQLA). HQLA is the key classification that the World Gold Council (WGC) seeks to change.

In its latest report, analysts at WGC recommended that the Basel Committee on Banking Supervision (BCBS) revisit the classification of gold and identify it as HQLA.

Analysts said in a research note: "In recent months, due to trade policy uncertainty, financial markets have experienced a period of significant volatility, stock prices have fallen sharply, U.S. bonds have suffered a rare sell-off, and bid-ask spreads have generally widened. In this context, gold confirms previous research findings: This is a highly liquid and orderly market that reduces market risk in a way typically associated with HQLAs."

The WGC noted that over the past six months, gold has once again demonstrated many of the key characteristics that assets must possess that qualify as HQLAs.

U.S. Treasuries, especially the 10-year and 30-year U.S. Treasuries, are among the most recognized top HQLAs. But gold has kept pace with these stable assets in recent months, the WGC noted.

Analysts said: "Using intraday minute-by-minute data, we found that the average daily volatility of gold is 0.027%. This is higher than the 0.016% volatility of the 10-year U.S. Treasury (OTR), but consistent with the 30-year U.S. Treasury (OTR) 0.028% volatility."

Not only is gold's volatility comparable to that of U.S. bonds, but its market is also extremely precise, with small bid-ask spreads.

Analysts said: "On average, the intraday bid-ask spread for gold is about 2.2 basis points, slightly higher than the 1.8 basis points for the 10-year U.S. Treasury but lower than the 3.3 basis points for the 30-year U.S. Treasury. Gold is in volatility The ability to maintain or even tighten spreads during this period highlights its depth and resilience as a liquid asset."

The WGC also noted that the gold market has a significant amount of liquidity comparable to U.S. bonds.

For investors who are bullish on gold, they can use option strategies to go long on gold.

Options Strategy: Using Put Options to Go Long Gold

Face$SPDR Gold ETF (GLD) $Strong trends, we can use options strategies to conduct efficient long trading. The current price of gold is $307.47, and we can sell itExpires July 3, 2025, exercise price $310, premium $570Put Option to go long gold.

This strategy can not only make profits when gold rises, but even if gold prices move sideways or fall slightly, you can still rely on premium to earn gains.

• Current price of the underlying asset: $311

• Option Type: Put Option (Put)

• Exercise price: $310

• Expiry date: 3 July 2025

• Premium：570USD (100 shares per contract, or $5.7 per share)

• Maximum profit: premium revenue

  • The maximum profit of the seller is the premium received of US $570. As long as the underlying price at expiration is ≥ US $310, the option will be invalid, and the seller will keep all the premium income.

• Break-even point: Exercise price − premium per share = 310 − 5.7 = $304.3

  • The overall profit is only when the underlying price is above $304.3 at expiration; Breakeven at $304.30; Below this price, there will be a loss.

sum up

In the face of Trump's aggressive policies, the unstable global situation, and the overweight of central banks, gold has become a real safe haven tool. Using the options market, we can efficiently go long gold while controlling risks through the strategy of selling put options. This is not only a smart way of trading, but also a sound investment choice that conforms to market trends.