Tom Bodrovics welcomes a new guest Drew Rathgeber, creator of ProGoldTrader.com and an 18 year trading veteran to the show.
Drew began by discussing spot transactions, explaining that the biggest counterparty risk is the company you are dealing with and their policies, as they can change the spread charge at any time. He then discussed spot trading accounts, noting that the biggest risk factor is the lack of regulatory authority and that they are effectively pooled accounts. Similarly, gold ETFs and funds have issues. Noting that the biggest risk is the inability to trade at night and that the market may not move in line with the price of the metal. He then discussed the futures markets, noting that the biggest counterparty risk is the FCM.
Drew then discussed the risk of the US government repricing gold, noting that he does not think it will ever happen, but it is a risk to consider.
Drew also discussed the advantages of using futures contracts compared to other markets such as crypto. He explained that when using futures contracts, customer funds are held in an escrow account by a Futures Clearing Merchant (FCM). This provides a layer of protection and oversight that is not available in other markets. Drew also touched on the stigma around futures markets, and how they are often seen as being manipulated. He explained that while manipulation does exist, it is important to remember that the goal is profits, and that futures markets were created for hedgers and producers to sell their products at the highest price possible. He also discussed the various sizes of futures contracts, and that it is possible to take delivery of physical metal from these contracts.
Finally, Drew discussed his program, ProGoldTrader, and how it aims to help people with their wealth preservation, learn futures trading, and lower their transaction costs. He believes that gold bugs should focus on the spread charge when investing in gold, as it can take a year or two to recover the cost of the spread. He also encourages people to consult their CPA for their individual tax situation.
Time Stamp References:0:00 - Introduction0:36 - Background & Lessons4:00 - Understanding Markets10:12 - Regulated Vs. Unregulated12:34 - Case Study & Premiums15:00 - Educating and E-Book16:37 - Average Annual Gold Moves18:42 - Collectors Vs Investors21:33 - Market Types & Risks26:18 - Futures Complexities27:32 - FCM & Segregation30:34 - Manipulation?32:45 - Industry & Futures Uses34:40 - Contract Sizes35:37 - Taking Delivery36:42 - Counterparty Risks38:51 - Gold ETF Funds41:42 - Gov't Gold Repricing43:03 - Ultimate Gold Goals44:10 - Pro Gold Trader46:42 - Wrap Up
Talking Points From This Episode
Spot transactions carry counterparty risk via companies who can change the spread charge at any time.Futures contracts offer a layer of protection due to funds being held in an escrow account by an FCM.ProGoldTrader is a program to help with wealth preservation and lower transaction costs for investors.
Guest Links:Website: https://progoldtrader.comEmail: [email protected]
Drew Rathgeber got his start trading spot precious metals at one of the nation's largest bullion dealers in Newport Beach, CA in 2004. Then transitioned to futures in 2006, specializing in precious metals. Now is the owner and president of ProGoldTrader.com, which specializes in trading software and execution designed just for bullion traders.
TRADING FUTURES, OPTIONS ON FUTURES, AND FUTURES SPREADS INVOLVE A SUBSTANTIAL RISK OF LOSS AND IS NOT SUITABLE FOR ALL TRADERS AND/OR INVESTORS. PAST PERFORMANCE, WHETHER ACTUAL OR INDICATED BY SIMULATED HISTORICAL TESTS OF STRATEGIES, IS NOT INDICATIVE OF FUTURE RESULTS. ACCOUNTS CAN AND MAY LOSE MONEY. ONLY GENUINE RISK CAPITAL, MONEY YOU CAN AFFORD TO LOSE, SHOULD BE USED.