Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold & Gold Stock Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Land Shark who wrote (21202)	4/9/2010 2:11:11 PM
From: ecrire	Read Replies (1) \| Respond to of 29622

Excuse butting in: Comex Gold Futures trade Feb, April, June, August. October, December. NOT May. Perhaps you mean Options which is different. Switch from April to June, contango cost unavoidable. If you stay in April you are subject to receive delivery. No counterparty risk. Failure to deliver might necessitate negotiation but that's highly unusual.

To: Land Shark who wrote (21202)	4/9/2010 3:35:54 PM
From: Patrick Slevin	1 Recommendation Respond to of 29622

For one thing I would stay away from the May contract because of light volume as a rule. I do not follow it. I also stay away from October because volume is greater in December (as a general rule, if memory serves). So I just trade Feb, April, June, August and Dec. Unless you can daytrade the contracts so that you can level off the Entry and Exit price you are going to pay up a bit for the next month; just the breaks of the game. To avoid that you can really only go for proxies such as miners. The great advantage miners have concerns the action by the Commercials. A good example may be grains or perhaps meats. When you are watching Live Cattle, for example, trade down you see the Commercials are getting Long. When they start reducing the Long position (or move to a greater Short position) the market tends to move higher as they sell into it. Meanwhile though, companies like Tyson, Smithfield foods and so on end up with great earnings because they loaded the boat. Anyway, sorry for the observation if the above seems obvious. To get back to your question I just either try to trade out or simply roll out. My trigger date to roll out is when the Volume in the next contract is greater or close to the same as the front month. I don't imagine the volume in May is very good, but you have until the 30th, I guess, to roll out. My guess is the 30th will be FND. As far as counterparty risk I don't imagine you will assume any risk outside of the Price of the contract because the Exchange and the brokerages will not allow a default. I do not believe so, anyway. In any event, you should check your broker's rules before you allow a trade to go past FND. They may close your position out before you have to worry about being assigned. Both Futures brokers that I use have that rule. Hope some of this is of some help.