7
Precious Metals
I stated at the outset of this book that I am interested in commodities much more than futures. In fact, most of the work I have done in the commodities markets since the 1970s has been in the physical and over-the-counter markets, and not in futures or exchange traded options. While I have invested in some futures and exchange traded options for my own account and for some clients, most of the advice I provide to producers, users, central banks, and institutional investors focuses on forwards, physicals, and dealer options. For the purposes of this book, however, I am focusing on commodities that are traded mostly on organized exchanges in the United States.
There are dozens of commodities in which one can invest. Most of them have some interest to me or to other investors. One has to invest the time to understand the markets, however. I have mentioned it before but it bears repeating: Otherwise sober investors often seem to throw logic, wisdom, and their best analytical processes to the wind when it comes to investing in commodities. Investors who follow extremely rigorous and disciplined fundamental methodologies for investing in stocks seem to believe that when it comes to commodities there are easy earnings to be had. They read an incredible report from an unknown person taken from the Internet and throw money at the wildest concepts in commodities. If they were to read a similar report about a stock, they would run for the hills, but when it comes to commodities ...
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