Docstoc

Gold_Investing

Document Sample
Gold_Investing Powered By Docstoc
					                     Man Financial Canada Co.




  Gold Investing – Academy & Finance
Zurich June 5, 2007 – Geneva June 7, 2007
                    Victor Adair
                Senior Vice President
            Derivatives Portfolio Manager

     www.ManFinancial.ca    www.VictorAdair.com
                              Program Outline



   Man Financial Canada Co. – About Us

   Different ways to participate in the gold market

   Why I like to trade futures and options

   Methods I use to trade and manage risks

   Market opinions – necessary but dangerous

   Series of charts – things I watch
                                       Disclaimer

   This presentation is for information purposes only
   Trading financial derivatives involves the risk of loss
   Investments can go up as well as down and involve the
    risk of loss
   Past performance will not necessarily be repeated in the
    future
   Man Financial Canada Co. is a member of the:

        Investment Dealers Association
        Canadian Investor Protection Fund
        Toronto Stock Exchange
        Montréal Exchange
        Winnipeg Commodity Exchange
           Man Financial Canada Co. – About Us


 Was established in 2006 and has rapidly established itself as the largest and most
   comprehensive futures and options providers in Canada

 Part of the Man Group plc, founded 1783


 Listed on the London Stock Exchange (EMG.L) in 1994, Man Group plc is a constituent of
   the FTSE 100 Index

 Leading provider of alternative investment products and solutions as well as one of the
   world's largest futures brokers

 4,000 employees operating in 16 countries, with key centers in Toronto, London, Pfäffikon
   (Switzerland), Chicago, New York, Paris, Singapore, and Sydney

 Funds under management (FUM) as of Sept. 30, 2006: US$56.8 Billion


 Fund sales last six months: US$10.6 Billion


 Six months profit before tax (PBT) on total operations: US$766 Million
                          Man Group plc




Market Capitalization (in £ billions) = £10.91
         (Report Date: May 30, 2007)
                     Man Financial Canada Co.
Leading Commodity Futures & Options Brokerage

  Full service futures and options brokerage

  Full service stocks and bonds

  Full service foreign exchange

  Managed Accounts / Alternative Investments

  Online futures and FX trading platforms


        www.ManFinancial.ca           www.VictorAdair.com

            Vancouver Calgary Saskatoon Winnipeg

             Toronto Markham Montréal Fredericton
                       Different Ways to Own Gold


Bars and Coins
         No “paper gold”
         Buy and Hold
         Leverage via collateral loan


Certificates
         “Vault receipts”
         ETFs


Jewelry
         Regional preferences
                         Different Ways to Own Gold
                                                         (Cont.)

Shares
         Unhedged / hedged
         Leverage: revenues / costs
         Performance relative to gold
         Not a “pure play”
         Special purpose gold share funds


Futures and Options
         Trading vehicles
         Liquid / transparent / pure play / leverage / 24 hours



   Participate in all markets at the same time for different reasons
              Why I Like To Trade Futures and
                            Options Contracts



 Mike Campbell – Jim Rogers – Moneytalks – October
  2003

 “The best way to trade commodities is with futures
  contracts”

 Five Reasons Why Futures Contracts Give You A
  Powerful Advantage - www.VictorAdair.com
              Why I Like To Trade Futures and
                     Options Contracts (Cont.)


 Efficient

 Transparent

 Pure Play

 Variety

 Leverage

 Easy to go short, open 24 hours, regulated market
                     What is a Futures Contract?


 Specified unit of trade with an expiry date

 Example: July 2007 Gold Futures Contract

 100 troy ounces / specified quality and delivery location

 First notice day, 29 June 2007

 Value of the contract at $600 oz = $60,000

 Minimum initial performance bond, approx. $4,000

 Leverage = 15:1
                                        How I Trade

 Global macro

 100% cash to 4X leverage

 I read a lot of different research - www.VictorAdair.com

 I’m not a day trader but I watch the markets all day

 Opinions – necessary and dangerous

 Anticipate a trade before it is time to make the trade

 Need technical confirmation of my opinion
How I Trade
     (Cont.)
                                         How I Trade
                                                    (Cont.)

Markets are interrelated but relationships change




              Gold / Oil Ratio
                                          How I Trade
                                                  (Cont.)

 All markets are spreads – look at different relationships
 What can I learn from spreads?
                              How I Trade
                                    (Cont.)




 Time horizon

 Mercenary – when markets change I change

 Challenge consensus

 Mass psychology – who is weak/strong?
                                         How I Trade
                                                 (Cont.)

Bill Gary – Realizing Bull Market in Corn – “corn goes up because
     people buy corn”
                                           How I Trade
                                                   (Cont.)

Options
 What is the current I.V. relative to historical range?
 Use alone or in combination with futures



                                  NB – Silver Options
                                        Managing Risk


 I know practically nothing and cannot predict the future

 Most likely risk: my opinion is wrong

 Use low leverage

 Add to winners, never add to losers

 Know where I will get out before I get in

 Write down my reasons
                                       Managing Risk
                                                  (Cont.)



 Max loss 1 – 2% per trade

 Accept that most of my trades will lose money

 No big losses, occasional big wins

 Expectations – Roy Longstreet - www.VictorAdair.com

 Be aware of my prejudices – foundation of all opinions

 22 Rules - www.VictorAdair.com
        Opinions – Necessary but Dangerous


Credit Boom = Asset Boom + High Risk Tolerance

     Many years of low interest rates

     Moral hazard

     Reaching for yield

     Don’t want to be left behind

     Pushing the envelope on risk
         Opinions – Necessary but Dangerous
                                                     (Cont.)

Commodity Bull Market

      Common cause: rapid demand growth / supply shortages

      China changed everything

      Dr. Michael Berry – Quality of Life Cycle



Commodities as an Asset Class
      “Funds” are in the commodity markets like never before

      Record open Interest and Volume in exchange traded futures



Will it Continue? – Jim Rogers – 20 year cycle
         Opinions – Necessary but Dangerous
                                                             (Cont.)

Interest Rates and the US$ to Rise – Short Term:

         Interest rates have been low for 20 years
         Economies are stronger than GDP reports
         Strong global growth
         Housing market won’t “meltdown”
         High and rising tax revenues
         Global credit boom = asset inflation
         Central banks will move against inflation
         “Risk” trades to get squeezed
         Fading deflationary impact from emerging markets


Rising interest rates and stronger US$ are not good for gold
            Opinions – Necessary but Dangerous
                                                                       (Cont.)

Gold Buying / Selling Pressures


Pre September 1999 - WAG
      Gold prices in a downtrend

      Willy nilly sales / lending from C Banks (BOE marked the low)
      Growing hedge books from gold miners
      Specs net short


Post September 1999 – WAG
      Gold prices in an uptrend
      Limited C Bank sales and lending
      Shrinking hedge books from gold miners
      Specs net long


The best gold trade I ever made
         Opinions – Necessary but Dangerous
                                                   (Cont.)

Protectionist Pressures in Congress

     at a time of strong employment

     law of unintended consequences


Short Term: downside risks to the gold price


Longer Term: monetary reflation takes gold to new highs


Martin Murenbeeld: “The people should own gold to protect
themselves from the natural inflationary tendencies of central banks
and governments.”
           Opinions – Necessary but Dangerous
                                                              (Cont.)

One rough looking Cadillac in Calgary




Bumper sticker on a very rough looking Cadillac in Calgary in the late 1980’s
after crude had dropped from $30 to $10:

  “Please God let there be another oil boom. I promise not to piss it all away next
                                        time”
                                           Commitment of Traders




Courtesy of Steve Briese: from the Monday, May 28, 2007 publication of Bullish Review
                                           Commitment of Traders
                                                                               (Cont.)




Courtesy of Steve Briese: from the Monday, May 28, 2007 publication of Bullish Review
Current Account Deficit
US Dollar – The Yuan/RMB
Gold is “Cheap” – Constant Dollars
Gold is “Cheap” – in Terms of Oil
Gold is “Cheap” – in Terms of Financial
                                Assets
ETF’s
Commodity Cycle
Monetary Policy
Gold Equities Watch
EURO/USD
EURO/YEN
10 Year Note
Copper
Gold/Silver Ratio
Gold IV
Silver IV
Gold Weekly
                                                     Summary

 Different ways to participate in the gold market

 Why I like to trade futures and options

 Methods I use to trade and manage risks

 Opinions are necessary but dangerous

 Credit Boom = Asset Boom + High Risk Tolerance

 Rising interest rates to cause a correction in asset prices

 Post correction monetary reflation in response to “Inflate or Die”

 Short term risks to the gold price

 Longer term expect new highs

              www.ManFinancial.ca           www.VictorAdair.com
                     Man Financial Canada Co.
Leading Commodity Futures & Options Brokerage

  Full service futures and options brokerage

  Full service stocks and bonds

  Full service foreign exchange

  Managed Accounts / Alternative Investments

  Online futures and FX trading platforms


        www.ManFinancial.ca           www.VictorAdair.com

            Vancouver Calgary Saskatoon Winnipeg

             Toronto Markham Montréal Fredericton

				
DOCUMENT INFO
Shared By:
Categories:
Stats:
views:10
posted:4/21/2011
language:English
pages:48