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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: LLCF who wrote (105130)5/28/2001 12:06:52 AM
From: tyc:>  Read Replies (1) of 436258
 
Well.... I'm not sure but I sure appreciate your interest. You say I am just buying a future on 1 ounce of gold. Ok! How much is that future worth ? How does the market calculate the price that I must pay for it ? Is the price kept in line by arbitrageurs ? What is the arbitrage ?

Presumably I must pay for it now, what I had in mind was paying only $220 in four years time, and what I wanted to know is what the market would charge me now for the right to do that. I might not exercise that right. I might simply sell it then at the then market price. Indeed if the price of gold is below $220 then I will not exercise it. (If the producer cannot meet its costs of production it will not produce).
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