Managing Editor

Gold vs. Oil

bearfund -

You're right, of course, about MacroShares' price variance from oil. That's, in fact, the point of the piece: turning an investment lemon into lemonade. We're USING, instead of simply DECRYING, this characteristic.

DOY's tracking error is a boon for the short-minded trader in this case because it creates, unintended though it may be, a leveraged return.

The premium and discount reflected in UOY and DOY prices are the costs of the embedded options discussed in "Accounting for MacroShares Premia/Discounts" (www.hardassetsinvestor...).

Play Your Short Game in Gold

GMiki -

COMEX June gold had last settled at $894.50 when you wrote your comment. Three trading sessions later, the contract settled at $869.20.

Some might consider a $2,530 return a nice short. At exchange minimum margins, that's a 59% gain.

Hard Assets Heresy: Talking Down Gold

Thanks for the comments. This pretty much approximates the discourse at the Hard Assets Conference. Strong emotions all 'round.

Whether or not you believe gold is in a secular bull market, there's no denying its volatility. And volatility is (or at least OUGHT to be)dampened by hedging.

Reducing volatility reduces the size of drawdowns which means an asset requires less upside to recover from sell-offs. Simply put, if you started with $10,000 of risk capital and suffer a 20% loss, you'll need a subsequent 25% gain to reach breakeven.

Investment management is all about looking at the horizon: what asset size is needed at certain points to fund retirement or some other need. Hedging is simply a tool that can be used to increase the odds of obtaining an anticipated outcome.

Leveraged Gold ETFs: The End of Gold Stocks

Dave M -

A commodity-based exchange-traded NOTE won't issue a Schedule K-1, but and exchange-traded FUND might.

Translating Currencies through Gold

Gold is traded internationally, as are currencies, with global delivery points.

Work done by David Parsley, of Vanderbilt University, and Shang-Jin Wei, of the International Monetary Fund, indicate that prices for goods traded internationally converge towards purchasing-power parity quite quickly.

Translating Currencies through Gold

Taxes and transportation cost differentials amounting to 32 basis points?

Got some numbers to compare?