Commodity Trade Mantra

Posts Tagged ‘Contango in Gold’

The Cost of Physical Gold vs. Gold Futures

Amongst many, there is one more advantage to physical gold over gold futures. Futures have counterparty risk. You are extending credit. For a short time frame, I wouldn’t worry about it too much. However for a 10-year period, there is a risk that gold could go into permanent backwardation . In that case, futures contracts could become worthless.

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