Futures Dealing

The forward quotation is usually higher than the spot price in a normal market. This is because securing copper today for delivery in three months needs someone to finance the copper. This reflects the cost of the forward quotation. When the forward quotation is higher than the spot price, the market is said to be in contango. During periods of very high demand with very tight supplies, the spot quotation can rise above the forward quotation. This situation is called a backwardation. It means very high spot demand and the inability to supply it without offering a premium to draw it to the market.

Gold that is as good as Cash
The price of gold is influenced by factors which are monetary, economic and political. The price was controlled by governments and pegged at US$20.67 per troy ounce for many years, until the early 1930s. All gold that was produced in Canada was sold to the Royal Canadian Mint.

In 1934, United States President Franklin Roosevelt officially raised the price of gold to US$35.00 per troy ounce and, in effect, he re-established the gold standard which had been displaced by floating exchange rates following the First World War.

The Bretton Woods agreement ushered in an era of fixed exchange rates whereby many world currencies were exchangeable into the U.S. dollar, which, in turn, was easily exchangeable into gold in 1947.

This system worked well into the late 1960s, when speculative pressure against the American dollar caused a run on gold. This brought in the system of "two-tier" in gold, where there was an official market for central banks and a "free" market for others.

Speculative pressures and a faltering United States economy obliged the government to raise the official price to US$38.00 per troy ounce in 1972 and again to US$42.22 the following year - in effect, devaluing the U.S. dollar.

Since 1972, gold has been traded freely on terminal markets. Both Zurich and London bullion markets were candidates for dominant influence. The Winnipeg Commodity Ex-change started the trade in gold futures in 1972. COMEX and other United States markets followed suit to create a lively market of spot and futures. Nowadays, based on terminal market buying and selling, gold prices fluctuate.

Due to the fact that it is an investment of last resort, gold also works as a currency and tends to go up in value as other currencies fall. Its price in a given currency will go up during times that the currency is weak, and fall when the currency is strong.

Prices quoted on futures and spot markets are for "0.9999 fine" gold, that is, gold with a minimum purity of 99.99%.