March 15, 2017 / 2:55 PM / a year ago

BUZZ-Gold miners open to volatility spike, buy options - GS

** Recent weakness in gold prices could lead to greater volatility in gold mining stocks, say Goldman Sachs derivatives strategists; recommend buying options on gold miners

** Investors withdrew $1.1 bln from gold commodity ETFs over the past two weeks and skew in gold ETFs moved higher, per GS data; “We see signs that investors are concerned about further downside risks,” GS says in note on Weds

** Gold miners, while lower over the past two weeks, do not yet reflect the full extent of the weakness in gold, GS says

** Option prices on the gold miners, historically cheap; VanEck Vectors Gold Miners Trust 30-day ATM implied volatility close to lowest in a year, per Thomson Reuters data

** GS recommends buying options straddles on Barrick Gold & Newmont Mining Corp to position for increased volatility

** Spot gold down 5 pct since touching a 15-week high of $1,263.80 on Feb 27; on Weds, gold price edged up slightly ahead of FOMC Mar rate decision

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