the Wealthy Canadian

Suppose that you and I are both planning on buying houses in the near future.  As luck would have it we both need the exact same size mortgage.  Both of us went out and got two quotes each for our mortgages.  The two quotes are for a fixed rate and a variable rate.  The following [...]

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For those in the the northern hemisphere, we are experiencing the longest night of the year.  Indeed, this is a dark time, the nights are long and it appears that we are being consumed by financial calamity.  Banks are failing.  The auto industry, led by the so-called Big 3, is on the brink of ruin.  [...]

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Continuing on my previous discussion of futures pricing, I will introduce the concept of arbitrage.
Arbitrage is taking advantage of a price difference in multiple markets.  In the futures market an arbitrage opportunity presents itself when the basis between the spot and futures prices deviates from the normal cost of carry.
There are times when a futures [...]

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Yesterday I discussed the difference between spot and futures pricing and how things work in a normal, contango, market.  Today I will look at what happens when things are not ‘normal.’
The difference between the spot and futures price is called the basis.  In a normal market there are adequate supplies of the underlying asset for [...]

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I used to hear about futures prices and think that if March Gold Futures were trading at some price then come March the price of Gold should, reasonably, be that price.  That is not actually the case.
You can buy gold in one of two ways.

In the cash market, where you will pay the spot price.
In [...]

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