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MAN Financial Canada Presentation

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Longer Term: monetary reflation takes gold to new highs ... Post correction monetary reflation in response to 'Inflate or Die' ... – PowerPoint PPT presentation

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Title: MAN Financial Canada Presentation


1
Gold Investing Academy Finance Zurich June 5,
2007 Geneva June 7, 2007
Victor Adair Senior Vice President Derivatives
Portfolio Manager www.ManFinancial.ca
www.VictorAdair.com
2
  • Man Financial Canada Co. About Us
  • Different ways to participate in the gold market
  • Why I like to trade futures and options
  • Methods I use to trade and manage risks
  • Market opinions necessary but dangerous
  • Series of charts things I watch

3
  • This presentation is for information purposes
    only
  • Trading financial derivatives involves the risk
    of loss
  • Investments can go up as well as down and involve
    the risk of loss
  • Past performance will not necessarily be repeated
    in the future
  • Man Financial Canada Co. is a member of the
  • Investment Dealers Association
  • Canadian Investor Protection Fund
  • Toronto Stock Exchange
  • Montréal Exchange
  • Winnipeg Commodity Exchange

4
  • Was established in 2006 and has rapidly
    established itself as the largest and most
    comprehensive futures and options providers in
    Canada
  • Part of the Man Group plc, founded 1783
  • Listed on the London Stock Exchange (EMG.L) in
    1994, Man Group plc is a constituent of the FTSE
    100 Index
  • Leading provider of alternative investment
    products and solutions as well as one of the
    world's largest futures brokers
  • 4,000 employees operating in 16 countries, with
    key centers in Toronto, London, Pfäffikon
    (Switzerland), Chicago, New York, Paris,
    Singapore, and Sydney
  • Funds under management (FUM) as of Sept. 30,
    2006 US56.8 Billion
  • Fund sales last six months US10.6 Billion
  • Six months profit before tax (PBT) on total
    operations US766 Million

5
  • Market Capitalization (in billions) 10.91
  • (Report Date May 30, 2007)

6
  • Full service futures and options brokerage
  • Full service stocks and bonds
  • Full service foreign exchange
  • Managed Accounts / Alternative Investments
  • Online futures and FX trading platforms
  • www.ManFinancial.ca www.VictorAdair.com
  • Vancouver Calgary Saskatoon Winnipeg
  • Toronto Markham Montréal Fredericton

7
  • Bars and Coins
  • No paper gold
  • Buy and Hold
  • Leverage via collateral loan
  • Certificates
  • Vault receipts
  • ETFs
  • Jewelry
  • Regional preferences

8
  • Shares
  • Unhedged / hedged
  • Leverage revenues / costs
  • Performance relative to gold
  • Not a pure play
  • Special purpose gold share funds
  • Futures and Options
  • Trading vehicles
  • Liquid / transparent / pure play / leverage / 24
    hours
  • Participate in all markets at the same time for
    different reasons

9
  • Mike Campbell Jim Rogers Moneytalks October
    2003
  • The best way to trade commodities is with
    futures contracts
  • Five Reasons Why Futures Contracts Give You A
    Powerful Advantage - www.VictorAdair.com

10
  • Efficient
  • Transparent
  • Pure Play
  • Variety
  • Leverage
  • Easy to go short, open 24 hours, regulated market

11
  • Specified unit of trade with an expiry date
  • Example July 2007 Gold Futures Contract
  • 100 troy ounces / specified quality and delivery
    location
  • First notice day, 29 June 2007
  • Value of the contract at 600 oz 60,000
  • Minimum initial performance bond, approx. 4,000
  • Leverage 151

12
  • Global macro
  • 100 cash to 4X leverage
  • I read a lot of different research -
    www.VictorAdair.com
  • Im not a day trader but I watch the markets all
    day
  • Opinions necessary and dangerous
  • Anticipate a trade before it is time to make the
    trade
  • Need technical confirmation of my opinion

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14
Markets are interrelated but relationships change
Gold / Oil Ratio
15
  • All markets are spreads look at different
    relationships
  • What can I learn from spreads?

16
  • Time horizon
  • Mercenary when markets change I change
  • Challenge consensus
  • Mass psychology who is weak/strong?

17
Bill Gary Realizing Bull Market in Corn corn
goes up because people buy corn
18
  • Options
  • What is the current I.V. relative to historical
    range?
  • Use alone or in combination with futures

NB Silver Options
19
  • I know practically nothing and cannot predict the
    future
  • Most likely risk my opinion is wrong
  • Use low leverage
  • Add to winners, never add to losers
  • Know where I will get out before I get in
  • Write down my reasons

20
  • Max loss 1 2 per trade
  • Accept that most of my trades will lose money
  • No big losses, occasional big wins
  • Expectations Roy Longstreet -
    www.VictorAdair.com
  • Be aware of my prejudices foundation of all
    opinions
  • 22 Rules - www.VictorAdair.com

21
  • Credit Boom Asset Boom High Risk Tolerance
  • Many years of low interest rates
  • Moral hazard
  • Reaching for yield
  • Dont want to be left behind
  • Pushing the envelope on risk

22
  • Commodity Bull Market
  • Common cause rapid demand growth / supply
    shortages
  • China changed everything
  • Dr. Michael Berry Quality of Life Cycle
  • Commodities as an Asset Class
  • Funds are in the commodity markets like never
    before
  • Record open Interest and Volume in exchange
    traded futures
  • Will it Continue? Jim Rogers 20 year cycle

23
  • Interest Rates and the US to Rise Short Term
  • Interest rates have been low for 20 years
  • Economies are stronger than GDP reports
  • Strong global growth
  • Housing market wont meltdown
  • High and rising tax revenues
  • Global credit boom asset inflation
  • Central banks will move against inflation
  • Risk trades to get squeezed
  • Fading deflationary impact from emerging markets
  • Rising interest rates and stronger US are not
    good for gold

24
  • Gold Buying / Selling Pressures
  • Pre September 1999 - WAG
  • Gold prices in a downtrend
  • Willy nilly sales / lending from C Banks (BOE
    marked the low)
  • Growing hedge books from gold miners
  • Specs net short
  • Post September 1999 WAG
  • Gold prices in an uptrend
  • Limited C Bank sales and lending
  • Shrinking hedge books from gold miners
  • Specs net long
  • The best gold trade I ever made

25
  • Protectionist Pressures in Congress
  • at a time of strong employment
  • law of unintended consequences
  • Short Term downside risks to the gold price
  • Longer Term monetary reflation takes gold to new
    highs
  • Martin Murenbeeld The people should own gold to
    protect themselves from the natural inflationary
    tendencies of central banks and governments.

26
  • One rough looking Cadillac in Calgary
  • Bumper sticker on a very rough looking Cadillac
    in Calgary in the late 1980s after crude had
    dropped from 30 to 10
  • Please God let there be another oil boom. I
    promise not to piss it all away next time

27
Courtesy of Steve Briese from the Monday, May
28, 2007 publication of Bullish Review
28
Courtesy of Steve Briese from the Monday, May
28, 2007 publication of Bullish Review
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  • Different ways to participate in the gold market
  • Why I like to trade futures and options
  • Methods I use to trade and manage risks
  • Opinions are necessary but dangerous
  • Credit Boom Asset Boom High Risk Tolerance
  • Rising interest rates to cause a correction in
    asset prices
  • Post correction monetary reflation in response to
    Inflate or Die
  • Short term risks to the gold price
  • Longer term expect new highs
  • www.ManFinancial.ca www.VictorAdair.com

47
  • Full service futures and options brokerage
  • Full service stocks and bonds
  • Full service foreign exchange
  • Managed Accounts / Alternative Investments
  • Online futures and FX trading platforms
  • www.ManFinancial.ca www.VictorAdair.com
  • Vancouver Calgary Saskatoon Winnipeg
  • Toronto Markham Montréal Fredericton

48
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