Gold Spreads

Discussion in 'Metal Futures' started by forestfire, Dec 16, 2008.

  1. I have been following the Gold Spreads on Nymex, specifically the dec09 dec10 spread. I can understand why the spread would decline on the rate cut, but was surprised to see it go from $15 to almost 0.
    Obviously this spread could in theory go negative but is it likely to?
    I liked the idea of going long the dec10s, selling the 09s as rates can't go any lower and in the long run (not short run) I'm bullish gold.
    Any info / comments / opinions appreciated -as you may have guessed, gold is not a commodity that I have traded before.
     
  2. Thank you for the article, I have read several similar to it, and what strikes me is that when the blog is called Financial Sense, maybe the writer is trying to be ironic...
    I think that this backwardation argument is fear mongering and predicting an unlikely doomsday scenario.
    Backwardation in gold is not to my understanding that unusual, and it is a short lived phenomenon. I would guess that the shortage in supply is similar to what happens in the fixed income market, where every few years there is a violent squeeze on expiry due to a shortage of CTD.
    These problems on expiry are an inherent flaw in the design of futures contracts and resolve themselves once the contracts have rolled over. So we will see once the DEC09 contract expires. Business as usual or the end of the world???
     
  3. Thanks again daddyeaux -this article made a lot more sense to me. By my calculations the gold backwardation is over. So panic over too I guess...
     
  4. the US dollar index was sub 80 today and "miraculously" had a rally

    I cant see how the dollar will fair any better in 2009.

    G/S should do fairly well as I wonder how many other Madoffs are out there. Poor Bernie
     
  5. I found out there’s something called Gold Spreads betting, does anybody here know anything about it? I’d like to hear a bit more as there was not much info available. I’m familiar with gold CFD’s, ingots, coins and options, but I had never heard of that.