CME Cash-Settled Precious Metal Futures

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.