What do banks have to gain from suppressing the price of gold? If I was a bank and knew that a lot of other banks were carrying huge short positions, I would get together with about 20 hedge funds and squeeze them out. You'd make a lot more on the long side than the short side. Runningbear
And you see what kind of funny argument some have, apart from personal attack what do they have First who are you to pretend that TICE is ignorant ? He is a professional whith 16 years experience a Chartered Financial Analyst and a Certified Public Accountant, who is the president of a fund and also consultant for other 200 fund managers totalising 2 trillions ? Second how can you pretend that everything is delta neutral. Third if you have gone to school above college you should have learned what delta neutral hedging is ... So what you wrote here is just to repeat BOOKS THEORY HAHAHA ! Even if you practice delta neutral hedging it is on a local scale. But here we discuss GLOBAL SCALE and SYSTEMIC RISK so you can't generalise from local to global because the factor scale changes everything about the risk dynamic and every engineer knows that. In fact it is this scale factor that is one the risk factor the other is the asymetry of risk (I will post something about that soon: it will use a game called the Calebasse used by some risk specialists to explain risk because it is a simple game whose probabilities can be calculated easily and whose rules reflects perfectly the concept of risk management). Did you hear the slogan "think globally act locally" ? OK now what delta hedging means GLOBALLY ? GLOBALLY It means FREE MONEY EXTRACTION, but do you know Lavoisier principle: nothing creates, only tranforms. So where do this money come from huh ? From your pockets (not directly from your pension funds but also from taxes that are collected and placed also there for example). There is also in the same magazine by the same TICE a full article on delta hedging only that also explains why delta hedging precisely is a global illusion and creates SYSTEMIC RISK for the whole system. It uses the assurance analogy but I don't remember exactly so I will find the article and post the link so that you can read what is delta hedging implication. At least even if you have short memory, you can remember LTCM: who was in LTCM ? One of the guy who theorise delta neutral hedging and what happens to LTCM huh ? Ah you say now see it's ok now. Yeah it's ok now because LTCM was just a rather SMALL PRIVATE fund now we don't talk about this little fund but about INSTITUTIONAL, GIANT FUNDS, for example it said that JP Morgan alone has 25 trillion AT RISK, the other banks 28 trillions.
First who are you to pretend that TICE is ignorant ? He is a professional whith 16 years experience a Chartered Financial Analyst and a Certified Public Accountant, who is the president of a fund and also consultant for other 200 fund managers totalising 2 trillions ? Second how can you pretend that everything is delta neutral. But let's even suppose so ... If you have gone to school above college you should have learned what delta neutral hedging is ... So what you wrote here is just to repeat BOOKS THEORY HAHAHA ! Even if you practice delta neutral hedging it is on a local scale. But here we discuss GLOBAL SCALE and SYSTEMIC RISK so you can't generalise from local to global because the factor scale changes everything about the risk dynamic and every engineer knows that. In fact it is this scale factor that is one the risk factor the other is the asymetry of risk (I will post something about that soon: it will use a game called the Calebasse used by some risk specialists to explain risk because it is a simple game whose probabilities can be calculated easily and whose rules reflects perfectly the concept of risk management). Did you hear the slogan "think globally act locally" ? OK now what delta hedging means GLOBALLY ? GLOBALLY It means FREE MONEY EXTRACTION, but do you know Lavoisier principle: nothing creates, only tranforms. So where do this money come from huh ? From your pockets (not directly from your pension funds but also from taxes that are collected and placed also there for example). There is also in the same magazine by the same TICE a full article on delta hedging only that also explains why delta hedging precisely is a global illusion and creates SYSTEMIC RISK for the whole system. It uses the assurance analogy but I don't remember exactly so I will find the article and post the link so that you can read what is delta hedging implication on a global scale. About LTCM: who was in LTCM ? One of the guy who theorised delta neutral hedging and what happens to LTCM huh ? Ah you say now see it's ok now. Yeah it's ok now because LTCM was just a rather SMALL PRIVATE fund now we don't talk about this little fund but about INSTITUTIONAL, GIANT FUNDS, for example it is said that JP Morgan alone has 25 trillions AT RISK, the other banks 28 trillions. If you tell me that it has worked since so long, then it is you that is ignorant of speculation history and long term cycle since at least the roman civilisation before JC: yes they have invented bonds and options already at that time. Speculation cycle is very long dozens of years and more than a whole life so in a whole life person you experiment global risk only once and before you cannot pretend to be aware that it will never happen during your life. each time they talk about new principle or new economy. Even for the last century new economy slogan has been used as marketing 3 times at least: in 1929 (I have a quote from the Wall Street journal but the translated version in French so I will post it one day because it's very funny), 1952 or 1962 and of course during our "new economy" area. Mundell, who has received the economic nobel prize in 1998 or 1999, said to a french journalist in 2000, that it was just marketing by the medias and that this false new economy will collapse because those kind of illusions always do by classic law. Of course if you believe in miracles ... I won't prevent you to be ignorant
I don't think Gold or any vehicle is a protection for long term because as I explained in another post every pic cycle is just shifted. For example housing market pic is a few years shifted from stock market pic, bonds a few month, and gold is the last pic but when everything is dark even gold doesn't shine. In fact when gold has plunged after others then long term cycle has finished and a new one can begin. I think that could happen not now but between 2010 and 2020 because of demography - economists have studied the correlation and even elliotits. If we don't have chance it will happen from now on but the process is activated and it can take perharps a few years more to fully manifest to its paroxym. For short term on gold I have a pic on my model at 347/355 so I don't think that it is time to buy gold near its top. For euro I have a target near 1.06 since last August. It could be 1.04 in real so as long as euro and gold do not take off their theorical top it is better to wait and buy after consolidation. If they do the break straight away ok but there is no signal they will do.
I too agree that delta neutral hedging does not accomplish enough. Going delta neutral only creates an illusion that you are safe from harm. I can think a dozens of examples where futures hedge funds have gone bust due to delta neutral hedging. Once you are margined out to the nth degree, all of your delta neutral garbage goes right out the window.
I trade derivaties for myself and I give technicals out to hedge funds, institutional brokers, and floor brokers down on the NYMEX in the Natural Gas and Crude pits.
"I give technicals ... floor brokers down on the NYMEX in the Natural Gas and Crude pits." So you are competing with MBF's ACD down there ?
I just modestly trade futures for myself. Less modestly I study crashes and I think I have found the equations for stock market that Gann said he has found but never revealed
http://www.elitetrader.com/vb/showthread.php?threadid=12519 well it's not pleasant at all and as for our subject it illustrates what could be the factor of materialising this potential risk.