PMMaven

Gold Futures' Dirty Secret (Part II)

Referring to a primary producer as 'Hedging' when he sells futures is incorrect. I know that it is said universally, but it is really price fixing. They still have market exposure! Hedging is when a Merchant Banker buys in the cash market and sell futures. A primary producer or consumer cannot hedge. If you want to take physical delivery off a public futures exchange (e.i.-NYMEX, COMEX, etc.) you pony up all the money (after all the final notice stuff); then you will receive what is called in the trade a 'warrant'. Then you contact a certified carrier (Brinks, etc.) to pick it up at the certified warehouse (Chase Manhattan,etc). And deliver it where you want. Keep in mind all this stuff cost money.