By David Roeder

What's next -- a free cell phone for every new futures trader?

The Chicago Mercantile Exchange and the Chicago Board of Trade are in a fee-cutting frenzy, lowering the cost to trade on their markets in response to keen competition. They want to fend off challenges to their turf from European exchanges, such as Frankfurt's Eurex AG, which last week plowed new ground with its offer of a $249 Apple iPod music player.

Taking its own tack, the Merc on Monday promised six months of free trades on its electronic system. The offer starts Sept. 1 and is open to new traders enrolled in training programs at firms that do business at the Merc. They must be trading only their own money, not that of customers.

July 16, 2004 - San José Palacio Hotel, San José, Costa Rica

You are invited to a Private Seminar

- Comprehensive Wealth Preservation Offshore

- Offshore Asset Protection

- Liability Exposure Strategies

- Non-Insurance Methods of Risk Management

By Bill Cara

The Gold futures have now topped the $395 level and finally appear to be headed further north in the next three months. That’s what it will take to bring some glitter to the languishing gold stocks and turn them into bulls.

If you happen to be a gold bug, there is now good reason to be optimistic. I have been priming your pump for a couple weeks, particularly in my June 7 article, Watching Gold Stocks for a Breakout. I have also been holding off issuing a Buy Alert only because the Monthly chart data has been negative across the board. That is no longer the case.

Now is the time to start a buying program. Gold stocks will rally. The gold bull is out of the barn!

By Bill Cara

The price of gold is about to jump through the roof, finally :), and gold is linked to money supply. With my reference on Thursday about the Fed no longer being able to properly use the money aggregates data in its policy decisions because of questionable data, it’s a good time to look further into this money supply situation.

Thank you to LB who asked me about it in the Comments Section to Thursday’s article, A Look Back At the Fed Bailout of Citigroup.

I wish more readers would send me their queries. I wake up in the morning and ask myself, “What am I going to write about today?”

By Richard McGregor

Like most things to do with soybeans in China, the Dalian Commodity Exchange is doing record business.

The number of contracts and the volumes of trades in the oil seeds more than quadrupled in the three years to 2003, and have continued to grow rapidly this year.

The breakneck increase in demand in China for soybeans has risen in line with the country's economic growth and, in turn, the increase in the quantity and quality of food consumption.

By Ann Saphir

International Financial Services LLC and International Financial Services Inc., of New York, were ordered to pay $100 million for defrauding currency futures investors, the Commodity Futures Trading Commission said.

John Walker Robinson, former IFS president, and Chan Kow Lai, an IFS director, were also "personally liable for the wrongdoing," Judge Gerard Lynch of the Southern District of New York said in an order of final judgment, posted on the CFTC Web site. The commission originally filed a complaint in July 2002.

By Bill Fleckenstein

In some ways, the present environment reminds me of the fall of 1987, when the dollar was going down, bonds were getting hit every day and stocks were holding in there, "acting well," which everybody thought was so great. We now know that folks weren't selling, since they thought portfolio insurance would protect them -- and we wound up with a crash.

Today, people don't worry about portfolio insurance because they don't think they'll have to sell. But there is the portfolio-insurance-like time bomb, via folks' ability to redeem their mutual funds with a phone call. We'll witness that one day, and it will be a sight to behold.

The rally in the Dow and Nasdaq has extended into overbought territory. This rally in price was not confirmed by volume which indentifies it as a bear market rally as opposed to the begining of a new bull market. The rally has also relieved the very oversold position that existed in these markets three weeks ago.

In my opinion the Fed has placed themself in the unenviable position of heads you win tales you lose.If interest rates begin to rise this will not be good for an economy fueled by very low rates. If they don't rise the economy will be showing signs of weakness. Neither of these prospects appear good for the stock market. If I was long stocks I would take some money off the table and if I were inclined to be a short seller I would sell some.

By Len Yates

What trader has not experienced seeing the market move in the anticipated direction, but his options gaining only very little? Betcha those options were overvalued when they were bought!

Or, covered writers: Have you ever written options and felt that you were getting unusually low premiums? Maybe you were selling when options were cheap!

Option traders measure how expensive or cheap options are using a parameter called implied volatility, or IV for short. The term implied volatility comes from the fact that options imply the volatility of their underlying, just by their price. A computer model starts with the actual market price of an option, and measures IV by working the option fair value model backward, solving for volatility (normally an input) as if it were the unknown. (Actually, the fair value model cannot be worked backward, but has to be worked forward repeatedly through a series of intelligent guesses until the volatility is found which makes fair value equal to the actual market price of the option.)