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Commodities Briefing - Categorized | ETFs / ETCs more

General public finally realizes commodities ETFs are terrible

Posted on 14 November 2012

Briefly, the vast majority of commodities markets follow a normal futures curve, wherein the prices for contracts of a commodity further out are more expensive than the contracts closer to expiration.
That is, in February of a given year, the price for March widgets would be cheaper than the price for July widgets. (People usually call this situation “contango”; and while that’s not technically correct, it’s not worth getting into the semantic distinction in this article, other than to acknowledge that people are going to be using that word to describe a normal futures curve.) Most commodities ETFs work by holding the front month contract of a given commodity, then selling that contract shortly before expiration and replacing it with the next month in the futures chain………………………………………..Full Article: Source


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This post was written by:

VRS - who has written 36729 posts on Opalesque Commodities Briefing.


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