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Suppose that a futures contract is drawn up in January for the delivery of 1000 troy ounces of gold in July at $1,500/troy ounce. The
Suppose that a futures contract is drawn up in January for the delivery of 1000 troy ounces of gold in July at $1,500/troy ounce. The current spot price of gold is $1,400/troy ounce. What is the value of this futures contract to the seller? What, if anything, do you expect to happen between buyer and seller of the futures contract when it is drawn up? Now suppose that the price of gold for delivery in July increases to $1,800 in, say, April. Who gains and who loses? By how much? Be specific in your answer (
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