Jim Rogers Buying the Yuan

[MrBlue]

I have a small account at Oanda. All these are outright purchase.

For a large position, it might be safer to buy a futures contract from CME.

[DcifrThs]

[ QUOTE ]
I have a small account at Oanda. All these are outright purchase.

For a large position, it might be safer to buy a futures contract from CME.

[/ QUOTE ]

so then the question becomes:

"is it better to purchase 10k of yuan outright or gain exposure to 125k of yuan for a similar tie up of capital"

i'd venture to guess that unless you actually need CNY for usage purposes, the futures contract would be better suited given the outlook and costs of execution.

Barron

[skindog]

Maintenance margin reqs are usually 75% of the initial margin for futures contracts. So if you put 10k into a 125k contract with 20:1 margin (initial margin req 6,250), it needs to drop 5,312.50 (so you have 4,687.50 equity)... 4.25%

I think I'm correct, but the first time doing this type of calc

[ahnuld]

I was under the impression that futures contracts where limited to maximum 12 months (at least the ones I see in my forex account). So if my opinion is the yuan will appreciate in the next 5 years but I dont know when, futures dont really allow me to make the bet..

[MrBlue]

My problem with Oanda and all these 'FX' shops popping up everywhere is broker risk. Frankly, I just don't trust them with 100k of cash. I might very well be wrong about the risk but I would feel a lot more comfortable with a big shop like Morgan Stanley or something.

[DcifrThs]

[ QUOTE ]
I was under the impression that futures contracts where limited to maximum 12 months (at least the ones I see in my forex account). So if my opinion is the yuan will appreciate in the next 5 years but I dont know when, futures dont really allow me to make the bet..

[/ QUOTE ]

you can roll futures pretty easily and seamlessly. for a roll to really hurt you, the price would have to jump HUGELY during the time you sold to the time you bought the next contract. that kind of break doesn't happen and you have a choice of when to put in your order to roll the contract (or you can simply take delivery ... but that requires $$$$). i think the roll order can be placed anytime between the last trading day of the previous contract and the last trading day of the maturity of your contract.

Barron

[Timosil]

DcifrThs:

What are the tax implication of rolling futures together? Is there a way to avoid paying cap gains every year? Also, not to sidetrack this thread, but what is your opinion on oil futures? In a scenerio where Supply will eventually diminish and Demand will have accelerating upward pressure (china/india)... it seems highly probable that oil will appreciate (at least until alternatives become viable)...

Also how do you find out the maximum margin ratios?

[ItalianFX]

So throughout all of this discussion, is the general consensus that we should buy and hold some yuan any way that we can?

It seems like this discussion went very quickly from an economic analysis to "how can we buy yuan?"

Also, at OANDA it says USD/CNY. That means we should SHORT that currency pair, correct?

[DcifrThs]

[ QUOTE ]
So throughout all of this discussion, is the general consensus that we should buy and hold some yuan any way that we can?

[/ QUOTE ]

yes

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It seems like this discussion went very quickly from an economic analysis to "how can we buy yuan?"

[/ QUOTE ]

the economic analysis behind "should we buy the yuan" has been hashed out a ton, search for posts with yuan or renminbi back when i started posting on this forum in april/may/june.

[ QUOTE ]

Also, at OANDA it says USD/CNY. That means we should SHORT that currency pair, correct?

[/ QUOTE ]

yes. in MOST (i would hope all but i can't speak to that) cases, the first currency in the currency pair determines the direction you want to take. if the think then yen will rise relative to the dollar you short USD/JPY or long JPY/USD.

Barron

[ItalianFX]

Thanks DcifrThs, someday I hope to have just a little bit of the knowledge that you have.

I used to trade FX, hence the FX in my screenname. I traded EURUSD, USDCAD, and USDJPY, but never really got anywhere with it. I worked basically with technical analysis and the charts, but never seemed to "get it." That was around the 2005 time frame.

I was told by an employee of Merrill Lynch (I think) that I shouldn't trade Forex because we are at a severe disadvantage.

The only problem I ever really had with it was that it moved incredibly slow. Maybe if I took a more fundamental approach to it, I could do better.

Thoughts/Advice?