Brad's Desktop

Why Trade Spreads?

More and more, people ask me why I write about spread trades. A typical gripe is: "Why bother with two positions? It's simpler to just buy or sell something outright."

That it is. But outright buying or selling of futures means you're also taking on big risk. Being short gold yesterday, for instance, would have hurt you B-I-G time. Being short gold and simultaneously long silver, however, would have been a money maker. (How much of a money maker? A 16% return on margin for just one day.)

In whipsawing markets, spreads may be some of the safest (relatively speaking) places to be. Think of it this way: you're short something, you're long something else. It doesn't really ...

Panic Investors: Gold or Silver?

Written by Brad Zigler

I got a rather cranky response from a reader about yesterday's column ("Deflating Inflation") that contrasted monetary inflation measured by the relative value of gold in the currency market (see "Computing Inflation In Real Time") with the U.S. government's price inflation metric, the Consumer Price Index.

"If you're going to measure inflation in terms of gold," went the plaint, "why not silver or platinum?"

Why indeed?

There's a lot ink, er, electrons devoted here to talking about gold as a store of value. Gold's a precious metal after all. But so is silver. We're plainly ...

Deflating Inflation?

Written by Brad Zigler

This morning's U.S. Consumer Price Index numbers could be considered balm for the bruises incurred by the nation's pocketbook recently. Year-over-year, as of August, the cost of the Bureau of Labor Statistics' benchmark goods and services basket rose at a 5.4% pace.

So what's so good about a rise in prices, you ask?

Well, the pace at which prices are rising has moderated. July's annualized rate of price inflation was 5.6% according to BLS. Much of the moderation was due, not surprisingly, to the drop in fuel prices. Gasoline prices, says BLS, declined at an unadjusted 7.4% pace in August. Still, petrol cost 35.6% more than it did in August ...

Brad's Desktop
Written by Brad Zigler

It's not every day that you get to jawbone with T. Boone Pickens. Boone came to Kansas City to lay out his plan for "bridging," as he puts it, the U.S. into energy independence by redeploying natural gas usage from power generation to vehicle fuel. The power generation slack would be, in Pickens' mind, picked up by wind energy.

Interesting plan, that. Boone figures it'll shave 38% off our energy bill and give us time to develop new technologies to get us weaned from our oil import addiction (we'll report more fully on Boone's plan in an upcoming feature).

That Pickens has a financial interest in wind energy should be no small surprise, though ...

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