Leverage of distressed commodities:

Leverage of distressed commodities:
- In case of gold at 650-700 , can this theory is applied to hold for long term like a year or two.
- same with crude , crude at 50 , is it safe to hold for a year/two with sufficient funds in account for down turn up to 40 ( need 10k extra funds for return of 10 k )

Structured Finance and Collateralized Debt Obligations: New Developments in Cash and Synthetic Securitization
in Chapter 5, Janet Tavakoli describes "The Leverage Paradox" whereby levering up equity (or even commodity) positions that are deeply distressed can make sense as a systematic strategy since the dramatic returns for correct bets can compensate for the inevitable downturns from such a strategy. But when leverage is applied to non-distressed debt securities, as was the fashion during the credit boom, disastrous results can (and did) happen with any air-pocket in the market, whether it is because of isolated cases of fraud or temporarily difficult liquidity conditions.