Managing Editor

http://www.hardassetsinvestor.com
Total Rating:
+3 / 0

129 Comments

    • Tue Oct 7th 09:24 AM | Rating: 0 0
      Commented on:
      Explaining Inflation, Again
      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.
      View article »
    • Mon Oct 6th 18:37 PM | Rating: 0 0
      Commented on:
      Explaining Inflation, Again
      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...
      View article »
    • Sun Oct 5th 14:39 PM | Rating: 0 0
      Commented on:
      Gold (and Gartman) Haunting Some Investors
      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.
      View article »
    • Thu Sep 25th 08:55 AM | Rating: 0 0
      Commented on:
      Analysts' Oil Forecasts Wildly Off Base
      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.
      View article »
    • Wed Sep 17th 09:30 AM | Rating: 0 0
      Commented on:
      Deflating Inflation
      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.
      View article »
    • Sat Sep 13th 11:12 AM | Rating: 0 0
      Commented on:
      Index Funds Aren't Speculators
      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....
      View article »
    • Sat Sep 13th 10:58 AM | Rating: 0 0
      Commented on:
      No Conspiracy Behind Tumbling Commodities
      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....
      View article »
    • Sat Sep 13th 10:52 AM | Rating: 0 0
      Commented on:
      Powerful Strengths, Pathetic Weaknesses, and What Donald Coxe Recommends
      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....
      View article »
    • Sat Sep 13th 10:36 AM | Rating: 0 0
      Commented on:
      Are Speculators Really That Bad for Commodities Markets?
      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....
      View article »
    • Sat Sep 13th 10:07 AM | Rating: 0 0
      Commented on:
      How Natural Gas and Oil Prices Are Linked
      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.
      View article »
    • Sat Sep 13th 09:58 AM | Rating: 0 0
      Commented on:
      Oil Spreads Widen - and Narrow
      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.
      View article »
    • Sat Sep 6th 12:51 PM | Rating: 0 0
      Commented on:
      Emulating Harvard: WSJ Has It Wrong
      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...).
      View article »
    • Sat Sep 6th 10:40 AM | Rating: 0 0
      Commented on:
      Goin' to Kansas City ... and Thinking About Wheat
      Asuming you're suitable as a futures trader, you'd tell your futures broker to buy Kansas City December (KWZ) wheat futures and simultaneously sell short Chicago December (WZ) wheat at the prevailing premium (as of Friday's close, the premium was 43.5 cents per bushel).

      Using the current premium as a limit, your order would sound like this: "Buy five Christmas (December) Kansas wheat, sell five Christmas (December) Board wheat at forty-three-and-a-half...

      (Grain orders are denominated in thousands of bushels rather than numbers of contracts).

      Historically, your biggest move would come within the first 3 1/2 weeks of the trade's life, so you could look for an exit point in the last week of September. Or you could hold the position through the first week in November at a marginal step-up in risk.

      You'd unwind the position by selling KWZ and buying back WZ at the then-current premium.

      That order, if the premium was then at say, 60 cents per bushel, would sound like this:

      "Sell five Christmas Kansas wheat, buy five Board wheat at sixty."

      Each side of the spread trade can be done on one ticket.
      View article »
    • Sat Sep 6th 10:06 AM | Rating: 0 0
      Commented on:
      Is Gold Getting Ready to Bounce?
      One might say, on a comparative basis at least, that GLD has ALREADY bounced. The price ratio of GLD shares versus GDX shares hit a record high 2.4-to-1 this week.

      That's certainly not what option guru Larry McMillan wanted when he recently recommended a December spread pitting long GDX calls against long GLD puts (details of the trade are outlined in the Hard Assets Investor artcile "Options As A Golden Opportunity," (www.hardassetsinvestor...).

      At last look, the spread was bid at $12.50, down from the $16 limit Larry proposed as a buy point.

      There's still, time, of course, for the spread to work out. The options expire December 19.
      View article »
    • Sat Sep 6th 09:48 AM | Rating: 0 0
      Commented on:
      A Compelling Energy Ratio
      Trading options could add a layer of complexity to the trade that some might abhor.

      There is an attractive seasonality in the natural gas/crude oil price relationship, but the ratio is not a very reliable indicator. Using energy-equivalent prices paints a more accurate picture (An explanation of this can be found in the Hard Assets Investor article, "Spreading Oil and Natural Gas" at www.hardassetsinvestor...).

      The article illustrates a short-term seasonal futures spread ,with good historic reliability, that capitalizes upon this seasonality.

      A simple 1:1 version of the spread (long natural gas/short crude oil), lodged on the first business day after the Labor Day holiday, would have cranked out a 35% return on margin by Friday's close.
      View article »
Loading...
Symbols:
Authors:
Quick Links:
Contribute an Article Become a Seeking Alpha Contributor

Transcripts

More Transcripts»