Taking actual delivery of a futures product

Discussion in 'Trading' started by LivermoreRisen, Dec 16, 2011.

Is the method I mentioned in my post the most cost efficient way of buying gold?

  1. Yes

    2 vote(s)
  2. No

    2 vote(s)
  3. I have no Idea

    1 vote(s)
  1. Suppose I open an account with a futures broker and buy a contract of GC (gold). If I hold on to that contract until expiry, will that mean that I will have 100 oz bar of gold shipped to my house? Of course, they would require payment before actually delivering to my house (because only $500 margin would have been used to secure that futures contract).

    So let's say I buy GC at $1600 (per oz). Each futures contract is worth 100 oz or $160,000. So upon receipt of $160,000 from me, the futures firm will facilitate the shipment of the gold to my house and I would receive a 100oz gold bar?

    I would like to know if there would be any other fees associated with taking delivery of the underlying asset of a futures contract. Would I just pay the initial commission to get into the 1 contract of GC (probably like $2.50 or something like that) or would there be other fees I would have to pay?

    Has anyone ever done this before? The thing is, I am in the market for gold but I notice that everywhere I go to find a gold bar/bullion seller, they are selling the gold at a hefty premium to the current spot price of gold (for example, one gold broker wanted to sell me 32.14 ounces of gold for $52,000...with a spot price of $1593, the actual price I should be paying is around $48,000....

    So, I thought it would be better to just open a futures account and take delivery on the underlying contract. It would appear that I would save a great deal of money this way.

    However, I would like to hear from someone who has actually done this before. If you have done this before, can you please tell me if htere are any other hassles (or other expenses) that need to be dealt with which perhaps I am not considering being that I have not gone through the experience yet.

  2. Don't buy gold the hard way.

    You are looking at the wrong gold dealers.

    Look at Tulving: http://www.tulving.com/goldbull.html

    1 Kilo Gold Bars (32.15 Ozs, .9999) are $4.95 an ounce over spot.

    You would have to ask about 100 oz bars or just buy 3 kilo bars.
  3. 1) Making and taking delivery is expensive and exasperating. :(
    2) Without going into excessive detail, the storage of precious metals involves storage costs, insurance costs and assaying costs.....that come out of YOUR pocket. :eek:
    3) When you want to sell your physical gold, a discount will be imposed too from the spot price. :mad:
    4) The mere fact that you're "in the market for gold" is very bearish. :p :D :cool:
  4. rmorse

    rmorse ET Sponsor

  5. I don't think they deliver to your home... (they're not Dominoes)
    they deliver at a custodian...