Futures Market - Palladium Highlight #4
Redelivery of palladium suggested 1 day prior to all-time high and prior to market collapse.
(COMMENT # 401)
UPDATED 19980515
COMMENT 1998-401
1. If you took physical delivery of March palladium pursuant to COMMENT # 249 of 980324, you should note that this market, on a monthly chart, is right at the upper limit of an 18 year channel formed off the 1982 and 1992 lows.
2. It would thus appear appropriate to exit this position by redelivering the position back to the market by selling the June futures position and tendering the metal back to the market upon contract expiration.
3. The objective of this strategy is, of course, to have our collateral denominated in a non-dollar, appreciating asset.
4. This is the first time ever that the price of palladium has exceeded the price of gold.
5. Review, again, COMMENT # 399.
6. For collateral purposes, the greater risk to capital would appear to be in holding palladium.
7. This switch can be accomplished by delivering back the PAM and taking delivery on the GOM.
8. The key is the Last Trading Day (LTD).
9. You can determine these LTD dates for PAM and GOM on pages 319 and 321 of "The 1998 $upertrader's Almanac - 2nd Half Edition".
10. Make sure and check the special delivery nuances required with your broker if you plan to avail yourself of this strategy.
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