Founders Discussion Review:

When do Gold & Silver Futures Spreads Warn of a Squeeze?

Mar 20, 2022

The following is a Synopsis from these previous lectures:

PREMIUM: 5 Founders Masterclass Recordings

Good Afternoon. Hope everyone had a good Thanksgiving and are enjoying the Holiday season starting with Hanukkah. - VBL Founders Masterclass Recordings We are in the process of editing and cataloguing the 15 or so Sunday discussions done since July 2021. Here are 5 Founders Masterclass recordings all in one post. Passwords have been changed and are at bottom of the post…

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Futures Spreads Review Notes

Components of futures spreads: the difference between a well supplied physical commodity is a positive number. It is added to the spot price to create a futures price value.

Therefore a Futures price is the spot price plus more costs added to “carry” that position until delivery at spot.

Cost of Carry

The price differential between spot and that future delivery of spot is commonly called the “cost of carry”;

Spot price + Cost of Carry (prorated) = Futures price

Cost of carry is made up of several components. The most well known of these are: Opportunity cost of money used, Storage costs, and insurance costs.

Opportunity = money used (times) interest rate for the time used
Storage: warehouse, vault, silo, tanker etc
Insurance: associated with contract guarantees etc

When a commodity is “well supplied” the total supply available for delivery matches the immediate demand for that commodity on the spot.

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