no - if there is a rally tomorrow - I might go back in -
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this is interesting -
"Understanding the Ratio Spread
Q & A Response
The ratio spread is hurting the gold shares and will continue to hurt the gold shares until the spreaders losses
money. Why else would you ever stop a profitable market operation, unless you lost money?
The ratio spread is presently long in the listed gold futures, which has to a degree skewed the public bullish
consensus figures. The reason why the long is in the gold futures market is because winners are paid out every
night. That means that if gold future rises one dollar and you are long 1000 contracts, you receive into your
account $100,000 real dollars that belong to you. A ratio spreader always wants the winning side of the spread to
pay out real funds, which may be required to service the losing side. Therefore the cost of the operation is only
the originating cost plus any slippage in the ratio. The short side originally was primarily in ABX and NEM, but as
profits grew in the operation, it was decided to spread the short out among all producers from 100,000 ounces per
year and up. Now the short has found its way into almost all listed gold shares, even silvers and gold juniors.
Here is How the Operation Works:
Gold is now going above $400. When TA correct on the bullion side, the ratio spreader will start to sell the long
side of gold futures first very quietly and quite professionally. When the long side of the gold futures get down to
about 50% of the original of the ratio spread position, the trader will start hitting every gold bid, and then hitting
the bid below, and the bid below and the bid below until gold falls back below the $400 level. All that is perfectly
legal.
Now the ratio spread trader simply sits back as the community does its normal panic as if their supply of Prozac
ran out. I get nasty grams by email saying that gold stinks, I stink and my dog stinks.
The ratio spread trader NOW puts out a net and buys all the barfing gold share holders' discounted gold shares at
progressively lower levels and makes a bunch, but does not go to lunch. Now the gold spread trader has gone
totally even on the gold shares, making full cover.
The trader now begins quietly and professionally to replace the gold futures long. When 65% of the gold futures
are in position, the trader begins to take the offerings and then pays above and takes the offering and then pays
above and takes the offering. The gold community, like a herd of sheep now, all stampede back into their shares
taking them ahead of gold and the spread traders begin to short the shares. This will go on and on until the spread
trader loses money or simply passes into the next world leaving huge riches to debilitate his children.
One of the greatest of these spread ratio traders had, like myself, the privilege of apprenticing to the best. Guy
Weiser Pratt was his dad's partner. His Dad was probably the best arbitrageur of the last 100 years. He was a
strong, quiet man who shunned publicity, but had a mind as sharp as a steel trap. His son, Guy Weiser Pratt, like
his father is a genius. Guy & I went to school together and traded first in class back and forth. As kids, we were
junior traders appreciating to the greatest of the great, each in his own discipline.
You are up against someone like Guy Weiser Pratt, so don't sleep easy if you do not protect yourself. Honor your
opposition, but professionalize as a community. All I can do is try to educate you. But if you refuse to make any
effort to protect yourself, how will you survive against the female counterpart of a person like Guy Weiser Pratt
who is now running the gold/gold share ratio spread position?
By the way, I really like the ratio spread with the gold share short of the major hedgers. That really makes lots of
sense. Let's not be angry with risk takers who honestly, professionally and ethically are opposite to us. Let's just
beat them at their own game with whatever tools are available to us ethically.
I will keep you posted as gold moves into the $400-plus area where this operation will start and therefore when
you might consider selling 1/3 of you position. Please make things easier for me by going to www.tanrange.com
and register on the web page. You will not hear from the company, but rather from me, so don't worry about being
bothered. I will comb this list carefully, and by this method, give you the heads up when the spread operation
starts. If the community is too lazy to take delivery of their certificates, I will certainly do my best to keep my
friends out of harms way."
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