You pay for it today coz you're a baller. This is called the "London spot".
*Get her a LV bag next time
That will cost you $1738 😉 Shout-out some minor shipping & storage costs.
You collect it just before your huns birthday. You're agreeing to a price now for an item you're collecting next month (futures contract)
Order site is called COMEX.
The private school term is "futures-spot price differential".
But now it's COVID & nobody shipping anything. You're fucked. What happens to the COMEX price?
Exactly! It starts to move higher
If you're a gold trader, it's ALOT.
The difference between COMEX & London spot reached up to $70. The most in decades!
Wall Street banks didn't see the divergence being this wide. They got burnt.
Problem is not being able to drop gold at the right locations.
Scarce logistics => harder to deliver => increase in prices
Monte Carlo simulations are used for the worst case scenario called Value at Risk (VaR).
Ends badly.