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To: Zardoz who wrote (38351)	8/4/1999 6:02:00 PM
From: Follies	Respond to of 116982

Thanks for the explanation but I must be dense cause I am still not getting the difference. Are you saying a forward contract cannot be resold? If NEM has forward contract to deliver gold they can't sell that contract to ABX or HM?, ie it has to be NEM's gold? If NEM bought an equivalent contract from HM and they delivered HMs gold instead of their own, who would know? You say a forward contract cannot be broken without stiff penalties, neither can a futures contract. If the forward contract can be resold then NEM can resell the forward back to whoever has the other side and effectively "close" the contract. The paint example has a labor component which isn't relevant I don't think, and beside painting your house is not the same as painting my house but an ounce of 99.999 is practically the same for all ounces. And sincerely, thanks again. I am not trying to be difficult, just trying to understand, particularly because you seemed to indicate that futures vs forward has a different impact on the spot price and until I understand the difference I can't see how they would have different impacts.

To: Zardoz who wrote (38351)	8/5/1999 8:56:00 AM
From: Follies	Respond to of 116982

I just found a great site which explains the details between futures and forward contracts: finance.wat.ch finance.wat.ch Basically the ONLY differences are that the terms such as where is delivery and how many ounces is variable and negotiated in a forward contract. And since they are non standard they are less liquid. The only fiscal impact to a hedger is that the cash flow on a futures contract is marked to market whereas a forward in not settled until delivery, but this is cash flow and not directly (yes indirectly) balance sheet. I can't see any difference (except psychological if that) to spot prices between a forward and a futures contract.