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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: skinowski who wrote (52652)	2/5/2006 5:07:19 PM
From: ild	Read Replies (1) of 110194

<<<Is there a reason not to LTBH futures, if one so desires? Just rotate them once in a while. I never did this, but would be curious to know if anyone uses this strategy, and whether there are any important downsides.>>> I think it's a good strategy assuming gold is in a bull market. Contango in gold futures is about 5% annually. GLD loses 0.4% per year. If you are able to make 4.5% on free cash then the contango doesn't cost you much. IMO the only risk is in futures' huge leverage. Greed may push you to buy too many futures, so in case of a good correction you can develop cascading margin problems, so you'll be forced to sell at the bottom. What's good in gold futures vs. gold miners is that all problems with the miners are positive for POG. Some mine got flooded, some miners struck, some mine got closed because of environmental concerns, some mines got closed because of strong local currency -- all these are bullish for POG.

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