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    • A Giveaway Oil Market [view article]
      But here, were discusssing THIS year's oil price. The year-to-date aveerage price of spot WTI crude is now $112.73/bbl. EIA is essentially saying that oil price action price for the balance of the year must such that the average will fall another 73 cents. If prices, however, stay at the current sub-$90 level, the average price will end up lower. Oddly enough, crude prices must RISE at some point to LOWER the average. Capice? Oct 10 10:12 AM
    • More Off-Base (Way Off-Base) Oil Forecasts [view article]
      Not oil price predictions. Not even too high or too low. Just that consensus expectations of production and suppliy are notoriously inaccurate.

      In recent weeks, the best Oil Patch prognostications have been 1-for-4 (oil stocks, gasoline and distillate inventories and refinery utilization).

      The predicitions are made on the eve of the weekly EIA report's release. They're simply not good guideposts for trading.       Oct 10 10:03 AM
    • More Off-Base (Way Off-Base) Oil Forecasts [view article]
      Pautaut -

      If you don't follow the numbers, you also don't follow the trends.

      These numbers aren't isolated one-offs. They're the continuation of a trend that began before Ike was spawned.       Oct 09 02:33 PM
    • Explaining Inflation, Again [view article]
      Here's a homework suggestion, JasonC: civility.

      The "lecture" that galls you so offerred an explanation of inflation past, not future. Domestically, it wasn't a wage spriral that inflated asset prices,. In large part, excess liquidity was supplied by the Fed.

      Perhaps you didn't read that when you did YOUR homework.       Oct 07 09:24 AM
    • Explaining Inflation, Again [view article]
      Whidbey -

      You CAN have inflation without rising wages. Rising wages characterize "cost-push" inflation. What we've seen recently, though, is monetary inflation overlaid with "demand-pull.&quo...       Oct 06 06:37 PM
    • Gold (and Gartman) Haunting Some Investors [view article]
      An at-the-money option would have a delta around .50 unless you're on the eve of expiration (when delta would be zero). Delta DOES matter. Greeks DON'T disappear at expiration. An in-the-money option at expiration would have, for example, a delta of 1.

      Time premium is predicated upon volatility assumptions. All of the other inputs in an option price model could be similarly perceived by all market participants; the one variable that's unique to each trader is the forecast for the asset's volatility over the option's life.

      There were no other time frames to consider for DZZ's performance when the hedge presentation was made. What you saw in the example was performance from inception. An update on DZZ's post-conference performance can be found on the Hard Assets Investors site at "Did You Hedge Your Gold Stocks? (www.hardassetsinvestor...) .

      The purpose of a hedge is just that ... to hedge against an unacceptable risk. If one didn't anticipate rough sailing ahead, or if one wasn't facing some other circumstance that precluded sale of an asset, one would remain unhedged. But there are times when assets must be held in tempestuous markets . An investor, for example, who's already taken a full complement of short term losses for the year might want to hold gold mining shares until they qualify for long-term capital gain/loss treatment.

      There's no presumption in the presentation that alpha is positive. Excess returns can be, and as we've seen often, ARE negative. In this case, a negative alpha would be symptomatic of management's failure to beat the performance of the gold market. Beta's a matter of perspective. There are, in fact, TWO betas associated with gold mining stocks: equity risk, which can be hedged with a stock index product AND gold risk, which is addressed by DZZ. There's still plenty of beta in Hecla even after hedging with DZZ.

      As for taking a "married" position (gold mining issues plus DZZ) at the outset, that's purely an alpha play. You'd be treating the mining issue as you would ANY equity issue. If you were looking for gold performance, buying gold itself would be more efficient.       Oct 05 02:39 PM
    • Analysts' Oil Forecasts Wildly Off Base [view article]
      The natural gas/crude oil spread was being TRACKED; it wasn't a holding. As of Wednesday's settlement, a 1-for-1 spread was $8,170 to the good, yielding a 54% return on margin. Sep 25 08:55 AM
    • Deflating Inflation [view article]
      Gold is used as an inflation yardstick because of its traditional role as money. Gold isn't consumed like the other commodities you mentioned either. Most all the gold mined since man started pulling the yellow metal from the ground is still with us. You can't say that about wheat or natural gas.

      Rising consumer prices are a SYMPTOM of the underlying monetary inflation. Note the axis in the accompanying chart reads "Annual IInflation Rate." Note, also, that the values are positive.

      Inflation hasn't disappeared. On an "annualized" basis, though, it's decelerating.

      The Bureau of Labor Statististics (BLS) measures price, not monetary, inflation with its Consumer Price Index (CPI) and Producer Price Index (PPI).

      Food and fuel ARE included in the CPI figures. Separate indexes are maintained for various commodity groups so, when BLS presents the monthly numbers, the agency reports the overall price inflation numbers, together with key commodity group indexes. The "core" inflation presentation is simply CPI minus the food and fuel indexes.

      We may not like the measurement technique employed by BLS, but the agency isn't hiding food and fuel inflation.       Sep 17 09:30 AM
    • Index Funds Aren't Speculators [view article]
      Indeed, Mr. Masters seems to have gotten it wrong when blamed "Index Speculators" for the run-up in crude oil prices.

      The market, in fact, signaled the disconnection between fund buying and prices long before oil arced downward.

      See the Hard Assets Investor article "Congress Blames Index Speculators" at www.hardassetsinvestor....       Sep 13 11:12 AM
    • No Conspiracy Behind Tumbling Commodities [view article]
      Congress' contention that "Index Speculators" (a Michael Masters coinage) were to blame for oil's run-up was sweeping and ill-founded in the first place.

      A refutation of Congressman Bart Stupak's (D-Mich.) researcher-in-chief can be found in the Hard Assets Investor article, "Congress Blames Index Speculators" at www.hardassetsinvestor....       Sep 13 10:58 AM
    • Powerful Strengths, Pathetic Weaknesses, and What Donald Coxe Recommends [view article]
      An easily calculated metric for assessing monetary inflation can be found in the Hard Assets Investor article, "Computing Inflation In Real Time" at www.hardassetsinvestor.... Sep 13 10:52 AM
    • Are Speculators Really That Bad for Commodities Markets? [view article]
      The profits made by oil's "big boys," titans, can be modeled by the crack spread, an explanation of which can be found in Hard Assets Investors article "Time For Crack Spreads?" at www.hardassetsinvestor....

      As for the speculator blame game, Congress seems hell-bent against so-called "Index Speculators." The conclusions reached by the prime witness against index funds seem sweeping and ill-founded.
      A refutation can be found in the HAI article "Congress Blames Index Speculators" at www.hardassetsinvestor....       Sep 13 10:36 AM
    • How Natural Gas and Oil Prices Are Linked [view article]
      The seasonal shrinkage of the crude oil premium to natural gas is already under way. Since Labor Day, the spread's narrowed $1.557 per mmBTU, or 16%. That would yield a $9,590, or 63%, return on margin for a 1:1 spread (long NG/Short CL).

      See the Hard Assset Investor article, "Spreading Oil And Natural Gas" at www.hardassetsinvestor... for details.       Sep 13 10:07 AM
    • Oil Spreads Widen - and Narrow [view article]
      An update: Pickens himself refers to the substitution of wind for natural gas as "the Pickens Plan" (viz: PickensPlan.com).

      The crack spread's strengthened to $13.08, or 12.9%, and the natural gas discount to crude oil has shrunk to $10.079 per mmBTU.       Sep 13 09:58 AM
    • Emulating Harvard: WSJ Has It Wrong [view article]
      Of the two biggest university endowments, Yale's is probably the most transparent, owing to long-time manager David Swensen's books.

      He'll readily admit to being an active, not a passive, trader. He tinkers with the portfolio daily (though his advice to retail investors is to invest passively through index funds).

      He also has a cadre of two dozen analysts poring over investment options and markets.

      He relies upon outside managers (e.g., managed futures) for pieces of the endowment portfolio. These allocations aren't "long-only" - there are plenty of long/short and absolute return strategies in the mix.

      And, with a multi-billion dollar cudgel to wield, he can negotiate down the high fee structures built into the deals he's shown.

      All these distinctions make the Yale (and similarly, the Harvard) investment universe different from the one accessible to retail investors.

      Swensen's advice for the hoi polloi can be found in his book "Unconventional Success" (a synopsis can be found in the article "Illiquidity Is Beautiful" here: registeredrep.com/inve...).       Sep 06 12:51 PM
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