On the Wings of Gold: GF's GAMBLING & COMMODITIES Thread

[Rosco]

Before I even knew these latest news, I tried to find BoA puts through my broker this morning (since I had a suspicion...). Guess what? No such thing. I guess there is a reason why they don't want to sell them to me.

 

 

Closing prices last night with stock at 10.94 were;

 

Jan 2012 7.5 Put 70 c

Jan 2013 7.5 Put 1.18

[G0ldfinger]

It seems that oil is perking up a little (and my options are off their all-time low for now). It might have to do with this here:

 

U.S. Drops Drilling Off Atlantic Coast, Eastern Gulf

http://www.bloomberg.com/news/2010-12-01/u...stern-gulf.html

 

Time to buy more $200-calls? I might look into it soon. But uranium is high on my list too.

[G0ldfinger]

Natural gas and Uranium are all 'screaming buys'. Natural gas is where oil was when it was $40 a barrel.

 

Gold stocks (GDXJ and GDX) are a screaming buy as well. GDX is targetting $100 - massive cup and handle.

How do I buy NG in Europe? Can I buy Gazprom shares? Genuine question. Still had not much time yet to work on uranium ideas either.

[Rosco]

How do I buy NG in Europe? Can I buy Gazprom shares? Genuine question. Still had not much time yet to work on uranium ideas either.

 

 

For Uranium play have you thought of simpy buying OTM calls on UUU ?

 

July 2011 7.0 strikes traded at 26c last

[G0ldfinger]

For Uranium play have you thought of simpy buying OTM calls on UUU ?

 

July 2011 7.0 strikes traded at 26c last

Yes, Uranium One (UUU.TO, if you mean that) is on my shopping list, but I need to check what my particular broker has for me there.

 

EDIT: TBH, this is more one for real investing rather than gambling, i.e. I might simply buy shares.

[G0ldfinger]

Yes, Uranium One (UUU.TO, if you mean that) is on my shopping list, but I need to check what my particular broker has for me there.

 

EDIT: TBH, this is more one for real investing rather than gambling, i.e. I might simply buy shares.

I have now put in an order to buy some shares of Uranium One on the Toronto Exchange. This is not really a gamble as indicated in the topic of this thread and the amount spent was also more substantial than in my $200-WTI-call gamble. (EDIT: It's still somewhat a gamble since I can't really do proper research on all these companies, but I heard a few good things about them.)

 

It's nothing compared to my bullion holdings, but I am serious now about building up an energy-related portfolio. I should have done this a long time ago at the bottom of the 2008 crash.

 

Uranium One trades at $4 ATM and was at $12 back in 2008 at the peak.

 

The next thing on my shopping list is: STRATHMORE MINERALS CORP.

[G0ldfinger]

Regarding my $200-oil calls: WTI is now at a 2-year high, i.e. the highest point since the trough of the 2008 crash.

[simonc]

I've been toying with the idea of switching some GBP into this:

 

http://www.h-l.co.uk/shares/shares-search-...ural-gas/charts

 

I'm looking for some exposure to foreign currency and to an energy play

 

Does anyone (without a dogmatic view of the USD) see a problem with this?

 

I have a two to five year outlook with investing and don't have the time or the inclination (or expertise) to investigate individual stocks

 

Any thoughts?

[G0ldfinger]

I've been toying with the idea of switching some GBP into this:

 

http://www.h-l.co.uk/shares/shares-search-...ural-gas/charts

 

I'm looking for some exposure to foreign currency and to an energy play

 

Does anyone (without a dogmatic view of the USD) see a problem with this?

 

I have a two to five year outlook with investing and don't have the time or the inclination (or expertise) to investigate individual stocks

 

Any thoughts?

I just don't like ETFs. Even worse are pure certificates etc. It's a pure short sale to you backed by nothing but the issuers promise.

[G0ldfinger]

On the uranium side I now own:

 

- STRATHMORE MINERALS CORP.

- Uranium One Inc.

 

As for my $200-oil calls, Richard Branson sorta foresees $200 too. (But my bet is on or before 14/11/2012. ) I am still debating whether I should get more.

 

Branson Says Crude Oil Prices Might Hit $200 a Barrel Without New Policies

http://www.bloomberg.com/news/2010-12-05/b...y-policies.html

[G0ldfinger]

Branson Says Crude Oil Prices Might Hit $200 a Barrel Without New Policies

http://www.bloomberg.com/news/2010-12-05/b...y-policies.html

Interestingly enough, my broker does not list the Societe Generale $200-oil calls anymore. Maybe that's normal and I lack the experience, but I find it somewhat funny given that they have been listed there for months.

 

Alternatively, I am now looking into RBS warrants. There is a 10:1 call for $160 oil, but it is a much closer maturity (15/11/2011). The price right now is EUR 0.04. So, 1,000 pieces would go for EUR 40, and if oil hit $170 within the next 11 months, one would reap in USD (170-160)*1,000/10 = USD 1,000. I'd be interest in thoughts. There is also one for $180 strike at half the price. Here is the prospectus (extra for Perishabull):

 

http://markets.rbs.de/MediaLibrary/Documen..._Prospectus.pdf

[G0ldfinger]

On the uranium side I now own:

 

- STRATHMORE MINERALS CORP.

- Uranium One Inc.

I added Hathor Exploration Ltd. today ( http://www.hathor.ca ).

 

For now I am done with Uranium. I might buy some Rare Earths shares sometime soon.

 

I also need to look into the whole oil call thing again (see post one earlier). These calls are going down in price, while the underlying goes up. That makes me wanna buy, but obviously those bets are really pure speculation as the maturities are somewhat close and the strikes high. But that's what this thread is about. The uranium shares that I bought are fairly risky as in "small caps", but they are an investment and no speculation.

[G0ldfinger]

I bought $120 WTI calls today (from RBS at a 10:1 ratio, maturity is Nov. 2011). They're not exactly cheap, but I bought a smaller amount of them as a hedge for any private flying I'll have to do next year. So, again, this is not pure gambling. I also wanted to add a different type of option to see whether this makes much of a difference in terms of admin: these are American calls, while the SG calls where European. I might exercise early just for the fun of it to see how it works now that I am taking part in these paper games. In any case, I still wonder why the SG $200 calls have disappeared from my broker's web page. I find that somewhat suspicious.

[G0ldfinger]

I need more ideas for real far-out-of-the-money longer term bets as originally intended in this thread. Any suggestions? I would prefer energy-related bets. I have covered oil now, and I hold uranium stocks. But would there e.g. be a way to bet longer term on Natural Gas in Europe? Are direct bets possible, or is it always through suppliers, e.g. by options on ROSNEFT etc.? Ideas are appreciated.

[G0ldfinger]

I've been toying with the idea of switching some GBP into this:

 

http://www.h-l.co.uk/shares/shares-search-...ural-gas/charts

 

I'm looking for some exposure to foreign currency and to an energy play

 

Does anyone (without a dogmatic view of the USD) see a problem with this?

 

I have a two to five year outlook with investing and don't have the time or the inclination (or expertise) to investigate individual stocks

 

Any thoughts?

Peter, I might bite on that one. I don't really like ETFs. But it seems a convenient way for getting some NatGas exposure. I have to read more up on it. Counterparty risk etc. is the biggest issue.

[littledavesab]

On the uranium side I now own:

 

- STRATHMORE MINERALS CORP.

- Uranium One Inc.

 

Hey GF can I ask did you buy these as straightforward stocks - or as options?

[G0ldfinger]

Hey GF can I ask did you buy these as straightforward stocks - or as options?

As registered shares.

 

EDIT: I also buy shares only on exchanges and avoid what is called "Direct Trade" by my broker. I haven't done my research on it, but the "Direct Trade" thingy sounds fishy to me and could be a naked short of the broker bank. It is also cheaper. As with bullion, I am happy to pay my premium for the real deal rather than a more phony promise.

 

BTW, I will move this thread now into the Blogs section.

[G0ldfinger]

I changed the name of the thread to include energy.

 

To sum it up for now, I have recently bought:

 

Gamble:

-European CALL 14.11.12 LI.SW.CR 200

 

Hedge:

-American CALL 15.11.11 WTI OIL 120

 

High potential investments (as shares):

-HATHOR EXPLORATION LTD.

-STRATHMORE MINERALS CORP.

-URANIUM ONE INC.

 

High up on my shopping list are (thanks to earlier replies):

 

-ETFS Forward Natural Gas (NGAF)

http://www.etfsecurities.com/csl/fwd/etfs_natural_gas_f3.asp

 

-Uranium Participation Corp.

http://www.uraniumparticipation.com

 

 

I am not particularly happy about the ETF, but I think it has a massive price potential, which is evident from the recent history were it traded around $30 in 2008, but has now been $5 for a while.

 

I simply don't buy into any cheap energy scenarios, which is why I am now so agressively buying into energy related investments and gambling strategies. So far, it is a very small fraction of my (essentially bullion only) portfolio, but I am on an expansion course.

 

EDIT: Energy related investments are a hedging strategy for rising costs stemming from energy price inflation. Since energy (in particular oil) is used for the production of everything, it is crucial to hedge it. Gold and silver bullion has this function to some extent too, but they are an even more fundamental hedge against financial calamity, so energy is a nice diversification.

[G0ldfinger]

As you guys know, I am quite aggressively building an energy portfolio or energy gambling strategy right now (with only a small amount of capital, I should add).

 

I discovered this ETF/ETC here, which is a double levered play on natural gas. It had a maximum value of EUR 55.00 in 2008 and sells for EUR 0.37 right now. Imagine the potential. Quite obviously, one could lose almost all capital on this bet. BUT if NatGas goes back to where it was coming from (which I believe), the potential is huge. So, I put some money in it. It seems a better way of gambling than options only.

 

Obviously, there also is counterparty risk etc. - the typical paper asset woes. So, this is a clear gamble, but at low cost with huge potential: exactly what this thread is all about. I would be interested in comments/remarks.

 

ETFS Leveraged Natural Gas DJ-UBSCI

http://www.boerse-frankfurt.de/EN/index.as...IN=DE000A0V9Y32

 

Price chart (I LOVE it since I essentially buy at an all-time low here):

3-Y: http://www.boerse-frankfurt.de/EN/chart.as...mp;exchange=ETR

6-M: http://www.boerse-frankfurt.de/EN/chart.as...mp;exchange=ETR

 

A more general link on the issuer and their ETF/Cs:

http://www.etfsecurities.com/en/document/etfs_document.asp

 

 

EDIT: My broker has now removed both oil calls (and similar ones) that I had bought. I still find this curious ...

[littledavesab]

I would be interested in comments/remarks.

 

ETFS Leveraged Natural Gas DJ-UBSCI

http://www.boerse-frankfurt.de/EN/index.as...IN=DE000A0V9Y32

 

Price chart (I LOVE it since I essentially buy at an all-time low here):

3-Y: http://www.boerse-frankfurt.de/EN/chart.as...mp;exchange=ETR

6-M: http://www.boerse-frankfurt.de/EN/chart.as...mp;exchange=ETR

 

A more general link on the issuer and their ETF/Cs:

http://www.etfsecurities.com/en/document/etfs_document.asp

 

 

EDIT: My broker has now removed both oil calls (and similar ones) that I had bought. I still find this curious ...

 

 

You have to watch those leveraged ETF/ETC's as they are based on an underlying option strategy which suffers time delay. There are threads on this somewhere around GEI. Up and down movements are like being rubbed with sandpaper. But the examples of the VIX ETF is a good one - see Roman Holiday / Wanderer's diary for recent info. Seem to remember GTG had made some good posts in the past.

[G0ldfinger]

You have to watch those leveraged ETF/ETC's as they are based on an underlying option strategy which suffers time delay. There are threads on this somewhere around GEI. Up and down movements are like being rubbed with sandpaper. But the examples of the VIX ETF is a good one - see Roman Holiday / Wanderer's diary for recent info. Seem to remember GTG had made some good posts in the past.

Good point, thank you. I will look for it, or maybe someone can post a direct link. In general, I like the idea of not just holding (perishable) options while still having great leverage that's why I bought in.

 

Your point is, I take it, that if the gas price would, say, just do exactly in reverse what it has done since 2008, the fund would not end exactly up there due to the frictions you pointed out (and due to managing costs too). It would be interesting whether there are studies on how much one would be off in comparison. Maybe it is not too dramatic? Anything less than 30% in the particular example would not deter me.

[G0ldfinger]

OK, got it (see below).

 

The other problem is of course the whole rollover costs etc. even if it is unlevered as there is no holding of the physical underlying but only futures. So, it is a somewhat losing proposition as long as the market is not going up.

 

The point is that I think that we've possibly seen the bottom in NatGas, but I could be wrong.

 

Anyway, thanks for all the input.

 

I remember reading in moneyweek that USD2 is quite a flawed product. I can't recall why but think it was something along the lines of it uses the Morgan Stanley FX short british pound index and the fact that it's shorting this pound index against the dollar in which the dollar is part of the index means there is going to be a significant built in tracking error. I hedge my sterling cash using a floating spreadbet, every one pound short bet against the USD covers £15000 at 1.5000 usd's to the pound.

 

If you want dollar exposure you could use UUP which tracks the dollar index or alternatively you could use an ETF that invests purely in T bills. There's minimal movement in the price of T bills and they are extra safe, of course the safety factor will not be of any use if your ETF provider goes to the wall.

 

You'll get killed holding that for any length of time

 

VXX Marches Towards Zero, Is VIX Heading Back to 25?

 

 

Why VXX Is a Bad Play

 

 

 

Early Performance Indicates VXX Is a Horrible Volatility Product

 

 

 

But don't take my word for it

 

I suspect that VXX is the equivalent of UNG for natural gas. UNG is basically a vehicle to extract as many $$$ out of unsuspecting retail traders as possible who simply do not understand how it works.

 

The following chart tells you all you need to know, it is VXX divided by the actual VIX, the ratio of VXX to VIX over time, it's going lower - fast

 

 

It's a very expensive way to hedge

[G0ldfinger]

The other problem is of course the whole rollover costs etc. even if it is unlevered as there is no holding of the physical underlying but only futures. So, it is a somewhat losing proposition as long as the market is not going up.

This is what I meant:

 

http://www.minyanville.com/businessmarkets...2/2009/id/24762

As previously discussed in VXX Calculations, VIX Futures and Time Decay, VXX suffers from negative roll yield when the VIX is in contango (that is, when the front-month VIX futures are less expensive than the second-month futures), with the result that VXX loses a few cents each day due to rebalancing -- just like a tire with a slow leak. This is why VXX isn't able to sustain its value the way the VIX does.

This is the problem with all commodities indices, and more so when levered.

 

So, to be precise, the indices themselves underperform spot, and then the tracker ETCs underperform the indices. And then you get that levered on top.

 

However, with an option, I lose it all if wrong, while the levered ETC will be gruel too, but not a 100% loss.

[kkeegan123]

I added Hathor Exploration Ltd. today ( http://www.hathor.ca ).

 

For now I am done with Uranium. I might buy some Rare Earths shares sometime soon.

 

I also need to look into the whole oil call thing again (see post one earlier). These calls are going down in price, while the underlying goes up. That makes me wanna buy, but obviously those bets are really pure speculation as the maturities are somewhat close and the strikes high. But that's what this thread is about. The uranium shares that I bought are fairly risky as in "small caps", but they are an investment and no speculation.

 

Hi GF, I was listening to a podcast over on Frisby's B & B's. Dom was chatting to Jaun Vagerra (Vena Resources (CA:VEM)).

 

http://commoditywatch.podbean.com/

 

Interesting company interview with Juan Vegarra, chairman and CEO of Vena Resources (CA:VEM). Operating in Peru , Vena has some very interesting uranium projects in a JV with Cameco (see photos below), a zinc mine that's about to go into production and some gold silver properties it is developing in a JV with Goldfields of South Africa.

 

Although Vena is not a pure Uranian play, I was impressed by Jaun and would like to ask whether you'd listened to the podcast and if so, why Vena didn't make it to your "buy" list.

 

I have already taken a position with Vena and am just curious as to your thoughts.

 

JL

 

PS. Great thread BTW.

 

 

 

[G0ldfinger]

Hi GF, I was listening to a podcast over on Frisby's B & B's. Dom was chatting to Jaun Vagerra (Vena Resources (CA:VEM)).

...

I have already taken a position with Vena and am just curious as to your thoughts.

I haven't listened to this interview yet and haven't heard about this company before. Thanks for mentioning it.