CME Cash-Settled Precious Metal Futures

Category: Market Reports
Author Name: Walter Pehowich
Posted: 10-24-2016 10:38:00 AM

Two Fed president speeches are on tap this evening, as investors await any clue on the possibility of a future rate hike.

Beginning today, the CME Group will expand their precious metals products to include a cash-settled spread and ratio contract, offering a new way to manage your precious metals exposure.

Previously, if you wanted to buy gold and sell silver as a ratio play you would have had to put in a buy order and sell order independently. Well now you can make that play as a single trade.

The CME now offers:

A gold silver ratio contract
A gold platinum ratio contract
A platinum palladium ratio contract

Each trade will be cash settled, meaning no delivery is required. The contract will also offer a true intraday price and spread transparency across the futures curve as well as:

Security through centralized clearing
guaranteed counterparty credit
segregation of customer funds through CME clearing
Easy accessible electronic execution
daily mark to mark settlement of positions

If you are interested, the CME contract for gold/silver is “GSR,” the gold/platinum spread contract code is “GPS,” and the platinum/palladium spread contract code is “PPS.”

I expect these CME ratio contracts will attract quite a lot of open interest in the days to come.

Precious metal markets were very quiet overnight, so quiet that not one gold EFP was posted on the exchange during the Far East or European session.

Two Fed president speeches are on tap this evening, as investors await any clue on the possibility of a future rate hike.

The CFTC reported Friday that the net long position in gold and silver fell for the third consecutive week. Gold dropped by 12 percent and silver dropped by 10 percent. For gold it was the lowest level in over seven months and silver the lowest level in eight months.

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About The Author

Author Name: Walter Pehowich
This editorial has been prepared by Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not prove to be true, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept the foregoing.