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- W2733102912 abstract "In an environment of high macroeconomic uncertainty in the fall of 2012, Tom Michelson was looking at his next trading opportunity. Michelson wanted to build a position in gold with a trading horizon of around a year and was wondering how he should go about investing in gold. Gold futures-based exchange-traded funds (ETFs) seemed like a good alternative, but he needed to understand better how gold futures worked. He was aware that futures-based ETFs for other commodities such as oil and gas had disappointing performances in recent years due to movements in the futures curves. Would a gold futures-based ETF be a good choice to profit from the price appreciation of gold? Excerpt UVA-F-1690 Apr. 22, 2013 BETTING ON GOLD USING A FUTURES-BASED GOLD ETF In an environment of high macroeconomic uncertainty in the fall of 2012, Tom Michelson was looking at his next trading opportunity. Michelson's view was that financial markets would remain in turmoil, and his bet was that gold prices would continue their sustained run-up fueled by the 2008 credit crisis, the successive rounds of quantitative easing by the Federal Reserve, and the ongoing euro-area sovereign debt crisis (Exhibit 1). He was willing to build a position of approximately $ 100,000 in gold with a trading horizon of around a year. How should Michelson go about investing in gold? It used to be that, as an individual investor, he would have to buy shares in a gold mining firm. In previous years, however, as gold prices increased, the stock price of gold mining companies had not appreciated because miners struggled with rising costs. Michelson was not a seasoned investor in buying physical gold (e.g., coins or bullion bars), and he wanted to avoid storage and other costs. His financial adviser suggested that an easy way to get exposure to gold was to invest in exchange-traded funds (ETFs) that tracked the performance of gold. ETF shares traded the same way as stocks and made commodities more accessible than ever. In particular, he was curious about PowerShares DB Gold Fund (ticker: DGL), a futures-based ETF. It seemed to be a cheap way to get futures-based exposure to gold without having to trade directly in gold futures. . . ." @default.
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- W2733102912 date "2017-01-01" @default.
- W2733102912 modified "2023-09-27" @default.
- W2733102912 title "Betting on Gold Using a Futures-Based Gold ETF" @default.
- W2733102912 doi "https://doi.org/10.2139/ssrn.2974504" @default.
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