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How To Make A Full-Time Income Trading Less Than Part Time

Big Dogs Exposed

Sound familiar? You have spent years surfing the 'Net, and studying books and charts in search of commodity trading rules, a currency trading strategy, stock market successful trading strategies, or information on how to use commitments of traders data. All you really want is the 'Holy Grail' of entry techniques. You usually end up adding one indicator on top of another, switching from one guru to the next, until you are so confused and unsure of your entry system that you are unable to make entry decisions and stay organized. You get so distracted and frustrated that you quit watching the markets all together!

Shows you how FAST you can make money when the BIG DOGS make their move - by shamelessly copying this winning group . Even I am STILL surprised by how much power they have over ALL markets - not just commodities futures, currencies, and stocks.G

Newsletter: What's UP with gold?

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What’s UP with gold? (November 23/03):

If you are at all concerned about the price of gold falling, gold futures having just nudged the US$400 mark, you can hedge your downside risk by owning some puts on the Philly Gold Index (XAU).

After all, the commercial traders have been awfully short the metal with their futures positions lately. Since the ‘Big Dogs,’ or ‘Smart Money’ as they are wont to being called, are ‘right on the money’ most of the time, it’s usually a safe ‘bet’ to follow their lead.

But, hold on just a minute. These guys shift their positions quickly and often. We should also keep in mind that the trend for gold of late has been bullish, despite the bearish COT reported numbers.

In actual fact, the significance behind their short positions is that they are essentially betting against their own product. And, they’ve been doing so for more than 10 years. They continue to sell their future production at today’s prices.

What they are saying by their actions is that they fully expect prices to be lower three, four, and five years from now. So, they are more than prepared to sell it off at today’s prices.

Strategic Investment editor, Dan Denning, posits that “this institutionalized bearishness towards gold is one of the strongest contrarian arguments for a higher gold price ... a much higher gold price.”

"One day - timing uncertain - the gold mining companies will have to reduce their forward sales by buying back at higher prices the gold they have already sold. The higher the price of gold climbs, the more costly it will be to buy back these forward sales."

Of course, he himself appears to be bullish towards gold for reasons related to what he foresees as “the forced de-leveraging of the American financial economy.”

It’s interesting and timely to note that I had no sooner put this piece together than Barrick Gold Corp. abruptly announced that they were scuppering their hedging program – to be unwound gradually over the coming decade – after extolling the virtue of this practice just two days ago.

Miners like Barrick use hedging contracts to lock in futures gold production at fixed prices. That protects prices for gold, protecting the miner if the price of gold drops.

The problem for Barrick is that the spot price of gold has been rising. Investors prefer un-hedged companies when the spot gold price is rising, because they assume fixed contract prices will be lower than the red hot spot price.

Even though Barrick’s hedges are supposed to give the company the option of choosing between the higher of the spot price or the fixed contract price, they are obviously bowing to investor sentiment.

If you want to include gold in your portfolio, and balance it properly, perhaps you should wait until gold underperforms other assets before you take the plunge.

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How To Make A Full-Time Income Trading Less Than Part Time

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