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

To: Bobby Yellin who wrote (27602)	2/2/1999 7:21:00 PM
From: Zardoz	Read Replies (1) \| Respond to of 116795

Like I didn't see that one coming. You would say that owning 100 ounces of gold is safer then owning 100 ounces in a forward, or future? Risk capital can be much lower, and more leveraged then the actual commodity. As I said before, a MARGIN account is a derivative. You aren't putting up 100% of your position. To short any stock, or commodity you MUST use a margin account. Just because Greenspan thought it was time to bail out LTCM, doesn't mean that all hedge funds are gambling halls. Or that all hedge funds make money. I would think that anyone investing in a Hedge fund would at least check them out. As of the close you could buy 1) Gold spot: 288.30/288.70 2) Gold futures for: DGC9J 02/02/1999 290.90 292.60 290.50 290.70 -000.20 39629 94399 3) Gold 290.00 call option for: GC9J C 29000 4.7 -.3 4195 4684 for 4.70* $100 = $470 So where does the real risk actually lie? If the POG dropped $20 you loose with the forward, and the POG. But as far as the future option goes you loose $470. So which is the better risk? It aint the spot, nor the future. Now if you're LTCM, you short the gold, and run off to the option market, buy calls later {and then have the FED sell to the spot} and hold the options down. So when someone sells short 2 Tons of gold, has anyone every considered that that gold is covered in the option markets? How many tons of gold does the above option contracts represent? futuresguide.com Care to add up all the short term options and how much are covered? futuresguide.com how about the short term futures too? These are by no means all the futures and options open, just some. Now the question comes, how much does a future option cost for the YEN or any other currency, or stock; before a market correction. What is the leverage of the above, compare it to LTCM leverage?