MAN Financial Canada Presentation

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Gold Investing Academy FinanceZurich June 5,
2007 Geneva June 7, 2007
Victor AdairSenior Vice PresidentDerivatives
Portfolio Managerwww.ManFinancial.ca
www.VictorAdair.com
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• Man Financial Canada Co. About Us
• Different ways to participate in the gold market
• Why I like to trade futures and options
• Methods I use to trade and manage risks
• Market opinions necessary but dangerous
• Series of charts things I watch

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• This presentation is for information purposes
  only
• Trading financial derivatives involves the risk
  of loss
• Investments can go up as well as down and involve
  the risk of loss
• Past performance will not necessarily be repeated
  in the future
• Man Financial Canada Co. is a member of the
• Investment Dealers Association
• Canadian Investor Protection Fund
• Toronto Stock Exchange
• Montréal Exchange
• Winnipeg Commodity Exchange

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• Was established in 2006 and has rapidly
  established itself as the largest and most
  comprehensive futures and options providers in
  Canada
• Part of the Man Group plc, founded 1783
• Listed on the London Stock Exchange (EMG.L) in
  1994, Man Group plc is a constituent of the FTSE
  100 Index
• Leading provider of alternative investment
  products and solutions as well as one of the
  world's largest futures brokers
• 4,000 employees operating in 16 countries, with
  key centers in Toronto, London, Pfäffikon
  (Switzerland), Chicago, New York, Paris,
  Singapore, and Sydney
• Funds under management (FUM) as of Sept. 30,
  2006 US56.8 Billion
• Fund sales last six months US10.6 Billion
• Six months profit before tax (PBT) on total
  operations US766 Million

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• Market Capitalization (in billions) 10.91
• (Report Date May 30, 2007)

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• Full service futures and options brokerage
• Full service stocks and bonds
• Full service foreign exchange
• Managed Accounts / Alternative Investments
• Online futures and FX trading platforms
• www.ManFinancial.ca www.VictorAdair.com
• Vancouver Calgary Saskatoon Winnipeg
• Toronto Markham Montréal Fredericton

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• Bars and Coins
• No paper gold
• Buy and Hold
• Leverage via collateral loan
• Certificates
• Vault receipts
• ETFs
• Jewelry
• Regional preferences

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• Shares
• Unhedged / hedged
• Leverage revenues / costs
• Performance relative to gold
• Not a pure play
• Special purpose gold share funds
• Futures and Options
• Trading vehicles
• Liquid / transparent / pure play / leverage / 24
  hours
• Participate in all markets at the same time for
  different reasons

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• Mike Campbell Jim Rogers Moneytalks October
  2003
• The best way to trade commodities is with
  futures contracts
• Five Reasons Why Futures Contracts Give You A
  Powerful Advantage - www.VictorAdair.com

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• Efficient
• Transparent
• Pure Play
• Variety
• Leverage
• Easy to go short, open 24 hours, regulated market

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• Specified unit of trade with an expiry date
• Example July 2007 Gold Futures Contract
• 100 troy ounces / specified quality and delivery
  location
• First notice day, 29 June 2007
• Value of the contract at 600 oz 60,000
• Minimum initial performance bond, approx. 4,000
• Leverage 151

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• Global macro
• 100 cash to 4X leverage
• I read a lot of different research -
  www.VictorAdair.com
• Im not a day trader but I watch the markets all
  day
• Opinions necessary and dangerous
• Anticipate a trade before it is time to make the
  trade
• Need technical confirmation of my opinion

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Markets are interrelated but relationships change
Gold / Oil Ratio
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• All markets are spreads look at different
  relationships
• What can I learn from spreads?

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• Time horizon
• Mercenary when markets change I change
• Challenge consensus
• Mass psychology who is weak/strong?

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Bill Gary Realizing Bull Market in Corn corn
goes up because people buy corn
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• Options
• What is the current I.V. relative to historical
  range?
• Use alone or in combination with futures

NB Silver Options
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• I know practically nothing and cannot predict the
  future
• Most likely risk my opinion is wrong
• Use low leverage
• Add to winners, never add to losers
• Know where I will get out before I get in
• Write down my reasons

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• Max loss 1 2 per trade
• Accept that most of my trades will lose money
• No big losses, occasional big wins
• Expectations Roy Longstreet -
  www.VictorAdair.com
• Be aware of my prejudices foundation of all
  opinions
• 22 Rules - www.VictorAdair.com

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• Credit Boom Asset Boom High Risk Tolerance
• Many years of low interest rates
• Moral hazard
• Reaching for yield
• Dont want to be left behind
• Pushing the envelope on risk

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• Commodity Bull Market
• Common cause rapid demand growth / supply
  shortages
• China changed everything
• Dr. Michael Berry Quality of Life Cycle
• Commodities as an Asset Class
• Funds are in the commodity markets like never
  before
• Record open Interest and Volume in exchange
  traded futures
• Will it Continue? Jim Rogers 20 year cycle

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• Interest Rates and the US to Rise Short Term
• Interest rates have been low for 20 years
• Economies are stronger than GDP reports
• Strong global growth
• Housing market wont meltdown
• High and rising tax revenues
• Global credit boom asset inflation
• Central banks will move against inflation
• Risk trades to get squeezed
• Fading deflationary impact from emerging markets
• Rising interest rates and stronger US are not
  good for gold

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• Gold Buying / Selling Pressures
• Pre September 1999 - WAG
• Gold prices in a downtrend
• Willy nilly sales / lending from C Banks (BOE
  marked the low)
• Growing hedge books from gold miners
• Specs net short
• Post September 1999 WAG
• Gold prices in an uptrend
• Limited C Bank sales and lending
• Shrinking hedge books from gold miners
• Specs net long
• The best gold trade I ever made

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• Protectionist Pressures in Congress
• at a time of strong employment
• law of unintended consequences
• Short Term downside risks to the gold price
• Longer Term monetary reflation takes gold to new
  highs
• Martin Murenbeeld The people should own gold to
  protect themselves from the natural inflationary
  tendencies of central banks and governments.

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• One rough looking Cadillac in Calgary
• Bumper sticker on a very rough looking Cadillac
  in Calgary in the late 1980s after crude had
  dropped from 30 to 10
• Please God let there be another oil boom. I
  promise not to piss it all away next time

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Courtesy of Steve Briese from the Monday, May
28, 2007 publication of Bullish Review
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Courtesy of Steve Briese from the Monday, May
28, 2007 publication of Bullish Review
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• Different ways to participate in the gold market
• Why I like to trade futures and options
• Methods I use to trade and manage risks
• Opinions are necessary but dangerous
• Credit Boom Asset Boom High Risk Tolerance
• Rising interest rates to cause a correction in
  asset prices
• Post correction monetary reflation in response to
  Inflate or Die
• Short term risks to the gold price
• Longer term expect new highs
• www.ManFinancial.ca www.VictorAdair.com

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• Full service futures and options brokerage
• Full service stocks and bonds
• Full service foreign exchange
• Managed Accounts / Alternative Investments
• Online futures and FX trading platforms
• www.ManFinancial.ca www.VictorAdair.com
• Vancouver Calgary Saskatoon Winnipeg
• Toronto Markham Montréal Fredericton

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