×

Who’s Buying All This Gold?

The strength in gold captured the attention of the Fast Money traders on Tuesday with the yellow metal hitting its highest level in nearly two weeks at $1,518.46 an ounce.

Although gold remains below its all time high of $1,575.79 struck in early May, chatter on the Street suggests gold is again gaining bullish momentum and could again retest that level.

Adding to the tailwinds, Goldman Sachs put out a positive note saying, "We expect gold prices to continue to climb in 2011… (on expectations that ) US real interest rates (remain) low."

In the wake of these developments, Doug Kass of Seabreeze spotted some unusual options action and alerted Fast Money host Melissa Lee. “Someone bought 50,000 out of the money Gold call options set to expire in August and September,” she tells the desk.

That’s a bet that gold is going higher – much higher.

What should you make of it?

Although Brian Kelly has no special information he speculates that the buyer could be a sovereign wealth fund. He’s particularly focused on China.

”China has an inflation problem, they need to revalue the yuan. If they go out and buy gold calls – when they devalue the yuan the dollar falls and gold pops up. That’s what I think is going on.”


______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment, but not have it published on our Web site, send those e-mails to fastmoney@cnbc.com.


Trader disclosure: On May 24, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Adami owns (AGU); Adami owns (C); Adami owns (GS); Adami owns (MSFT); Adami owns (NUE); Adami owns (BTU); Terranova owns (XOM); Terranova owns (KSS); Terranova owns (CVI); Terranova owns (OXY); Terranova owns (TM) ; Terranova owns (BJ); Terranova owns (DIS); Terranova owns (PFE); Terranova owns (V); Terranova owns (HPQ); Terranova owns (FLX); Terranova owns (JPM); Terranova owns (MCD); Terranova owns (PEP); Terranova owns (VRTS); Terranova is short (DELL); Karabell owns (AAPL); Karabell owns (GOOG)

For Joe Terranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (NRCI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLF)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)|
Virtus Investment Partners Owns More Than 1% Of DOMINO'S PIZZA UK & URL PLC
Virtus Investment Partners Owns More Than 1% Of (DRYS)

For Zachary Karabell
River Twice Capital is short (SHLD)
River Twice Capital is short (GS)
River Twice Capital is short SPY, QQQ

For Brian Kelly
Accounts Managed By Brian Kelly Capital are long (SLV)
Accounts Managed By Brian Kelly Capital are long (VLO)
Accouts Managed by Brian Kelly Capital are long (TLT) calls
Accounts Managed By Brian Kelly Capital are long (ANDE)
Accounts Managed by Brian Kelly Capital are long (MCP) calls
Accounts Managed By Brian Kelly Capital are long (TLT) Calls
Accounts Managed By Brian Kelly Capital are long Australian Dollars
Accounts Managed by Brian Kelly Capital are long (HOC) calls
Accounts Managed by Brian Kelly Capital are long yen

For Dan Dicker
**No Disclosures

For Colin Gillis
*No Disclosures

CNBC.com with wires.