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Gold/Mining/Energy : Gold Price Monitor

GDXJ 92.99

+2.9%

Nov 7 4:00 PM EST

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To: Enigma who wrote (38243)	8/3/1999 11:32:00 AM
From: Zardoz	Read Replies (1) of 116753

Surely a forward sale means that there will be an equal forward purchase (to cover) - usually near the expiry date - so in a sense this is delayed demand on the future price. To say that a delayed demand is made, suggests that there is a bias in the futures for a long or short position going against the move in the commodity. Maybe a trader will close his position by buying or selling the spot commodity. In which case the demand is determined by when and where the traders entered the markets, and where the spot is relative to their closing of the positons. The producer usually sells into the spot market at the same time as he lifts the forward contract. I'm under the opinion that producers/hedgers never sell spot into the market. This action would go against the reasons for hedging. They may although buy puts, after writing calls, and then push the gold out onto the markets. In the case of ABX, it would always be a bad to sell spot. You would be better off closing a lease position. The actual mechanics may vary - to sell he has to lease the gold and repay the gold loan when the transaction is completed - although there are no doubt all sorts of roll-over arrangements. Yupe. I don't see how it {forward selling} actually supports the spot price? I don't want to do the math right now. But look at all the gold that is involved in forwards, options etc. This is gold that is basically removed from the systems as covered, and as such isn't dumped into a volatile market place. But because interest rates are a factor in a forward contract, you are biased to a rising commodity price. But as time continues, that premium limits the ability to support. But we have so many months in forwards... ;) Hutch

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