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Gold/Mining/Energy : Gold Derivatives -- Ignore unavailable to you. Want to Upgrade?

To: IngotWeTrust who wrote (6)	9/22/1998 2:50:00 AM
From: marcos	Read Replies (2) \| Respond to of 39

I miss Porter too, and remember that post. ... So - is not all this piling on of options upon options effectively a short position on gold? ... which must at some point be covered? I don't pretend to understand this stuff. Fwiw, I've never seen Hutch claim infallibility. Quite the opposite, in fact, he and I used to talk on the Canadian Banks thread ...... cheers

To: IngotWeTrust who wrote (6)	9/22/1998 8:43:00 AM
From: a. paisley	Read Replies (1) \| Respond to of 39

what he think if china devalues in nov and will major gold companies unhedge there postions what will ever cause an upward surge

To: IngotWeTrust who wrote (6)	9/22/1998 3:50:00 PM
From: Zardoz	Respond to of 39

I respect Porter Davis, but he is not here to defend his comments. "Just so everyone is clear on this--buying stock and selling calls has exactly the same risk/reward profile as selling puts naked. It's funny how people view covered writing as conservative and put selling as risky. I personally believe people should trade options, that is, make a market call and take the appropriate option stance. Equity commissions will eat your profits too much." Porter Davis comment: {He's wrong: the risk is not the same} Sound familiar? Your problem is marginal coverage. In the example you gave, you are assuming {and incorrectly} that the writer is unable to cover their positions? If I were to write a naked put, I assume the written obligation of filling. So in essence I must cover that contract. If I am unwilling or unable to, than I can expect to loose sufficient cash from litigation. "In a pattern that's become all too familiar to gold investors, the POG plummets in the face of OPTIONS EXPIRY/FIRST NOTICE WEEK as a time when POG is going to plummet. This, after all, is the age of paper -- paper contracts on paper contracts on paper contracts. To call it a house of cards would be a kindness. So each month, in order to keep the bullion banks & trading houses from going under, these derivative positions have to be protected. So, Will, go out in the future and short the market prior to these important dates, get the hedge funds to pile on, and you've got a declining price gold market. And, so it goes." That is a self professed opinion, based on WHAT? Consider this: No hedge fund will throw away a chance to make money. EVER. If this house of cards was vulnerable, the hedge funds would attack it for a positive price of gold movement. Now the opposing view: Companies such as ABX {Barrick Gold} and NEM {Newmont Mining} who have active trading hedges going on, actually support the spot price of gold, by buying and selling into the future. If they weren't there to do that, the volatility on GOLD would be higher, and more vulnerable to rapid depreciation. This is why Porter Davis, couldn't understand that ABX was trading at a $10.0 {CDN} premium to when the Price of Gold was at the same levels. if production price is $150 {or even $200 US} an Oz, than you need the active buying on the spot to support the over valued positions. The hedge funds are pounding on the Price of Gold, cause it's OVER VALUED. It's the constant devaluation of currencies, like the Rubles, Ringgit, Rupees that have created lower payrolls {in USD terms}. That's why you had a breakdown in the XAU {Which I predicted Aug 7, on the GPM} Gold is not reflecting the production cost because of ABX/NEM. As an example consider silver, which has more liquidity, and is harder to manipulate up, but spot buying. It' take Buffet comments to move silver. 204.162.156.45 cbs.marketwatch.com