In notes4, “because gold can earn a return by lending it out,strategies for holding synthetic gold offer a higher return than holding just the physical gold without lending it out.” i cannot understand.
A synthetic “long gold” position can be obtained using derivatives. Since: F = S * e ^ (rf - l) Wouldn’t synthetic gold be (?): S = F * 1 / [e^(rf - l)] in other words synthetic gold = Long Gold Futures contract + a zero coupon bond
McLeod81 Wrote: ------------------------------------------------------- > S = F * 1 / [e^(rf - l)] > in other words synthetic gold = Long Gold Futures > contract + a zero coupon bond That’s not right, wouldn’t this actually mean that synthetic gold is: One zero coupon treasury w/ par = Futures price; maturity = futures expiration + Another zero coupon treasury with par = FV(lease receipts) ?
I think long futures and long a bond would be correct