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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Activatecard who wrote (124290)9/20/2001 5:09:08 PM
From: pater tenebrarum  Read Replies (2) of 436258
 
well, it definitely makes further forward selling a lot less attractive. the contango is after all largely a function of the yield spread between LIBOR and the gold lease rate (storage is negligible), so at the very least it will discourage the taking on of new positions, and that by itself would remove quite a bit of supply from the market. that in turn could eventually lead to the carry blowing up, as people begin deserting the trade out of fear of rising prices, thus producing the very price rise they fear. sort of like the bear market in reverse.
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