Question
Assuming that you are the financial controller of Modern Jeweler Company. Your production manager has indicated today that he/she requires 5,000 grams of 22K gold;
- Assuming that you are the financial controller of Modern Jeweler Company. Your production manager has indicated today that he/she requires 5,000 grams of 22K gold; 5,000 grams of pure silver, 3,000 grams of red-copper and 3,000 grams of Platinum on 15th September 2022 to cater for a special order. At the same time your sales manager indicated that the company received an order to sell 25,000 grams of minted gold coins in an open market at the specified minted gold market price.
Your procurement manager identified the price trends of the above listed metal commodities. The trend is as follows:
Metal commodity | Spot Price /gram | Price trend by 15th September |
22K Gold | RM600.00 | Anticipated to increase by 20% |
Pure Silver | RM4.50 | Anticipated to decrease by 10% |
Red-Copper | RM 0.05 | Anticipated to be unchanged |
Platinum | RM200.00 | Anticipated to increase by 25% |
Minted Gold Coin | RM350.00 | Anticipated to decrease by 10% |
If all the above listed metal commodities have an exact futures market contracts for October 2022, and each of the listed metal commodity has a standard contract size is 100 grams.
Indicate the positions you will take in each of the respective October futures contracts on each of the commodity listed in the above table in order to keep your cash flows stable on 15th September 2022?
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