tastytrade logo
Futures MeasuresGold Futures & Their Relationship To Other Metals Futures | Jul 7, 2015
Up Next
    Futures MeasuresGold Futures & Their Relationship To Other Metals FuturesJul 7, 2015

    Pete makes a splash in the metals market by introducing us to gold futures and how you can create a gold/silver spread to play off of volatility.

    Comparing The Gold ETF (GLD) To Gold Futures (/GC)

    Gold futures (/GC) are a great alternative to buying gold bullion, coins, or other mining stocks. One share of the ETF GLD is equal to 1/10th of an ounce of gold, therefore 10 shares of GLD is equal to 1 ounce of gold.

    One gold futures contract represents 100 ounces of gold (1,000 shares of GLD is equal to 1 gold futures contract).

    There are many benefits to trading gold futures over GLD:

    • The volume of contracts traded is much higher (more liquidity)
    • The margin requirements are significantly lower (less than $5k* vs $58k*)
    • The futures contracts are accessible 23.5 hours/day, GLD is available for 7 hours/day.
    • Tax advantages

    Metal Product Specs:

    Gold Futures Specs
    Gold Futures (/GC):
    Index Multiplier (leverage) - 100
    Current Price - $1,170
    Notional Value
    - $117,000* ($1,170 x 100)
    Tick Size - .1 ($10.00/tick)

    Silver Futures Specs
    Silver Futures (/SI):
    Index Multiplier (leverage) - 5,000
    Current Price - $15.195
    Notional Value
    - $75,975* ($15.195 x 5,000)
    Tick Size - .005 ($25.00/tick)

    Copper Futures Specs
    Copper Futures (/HG):
    Index Multiplier (leverage) - $25,000
    Current Price - $2.52
    Notional Value
    - $63,087* ($2.52 x 25,000)
    Tick Size - .05 ($12.50/tick)

    *Values subject to change based on where the market is at

    Metal Futures Correlations

    When looking at 1 month correlations, we see that gold, silver, and copper have had little to no correlation, a fundamental breakdown from what is expected.

    When looking at the 3 month correlations, we see a high correlation between gold (/GC) and Silver (SI), but still low correlation between those two metals and copper.

    The Gold/Silver Ratio

    The gold/silver ratio will tell you the number of ounces of silver it would take to purchase 1 ounce of gold at a specified date.

    If we look at gold and silver prices going back over 100 years or more, the historical ratio is 30 ounces of silver to one ounce of gold (30:1).

    Over the course of the last year, this ratio has been at about 70:1 and over the course of the last 3 years, the ratio has fluctuated from about 35:1 all the way up to 85:1.

    How do you make a trade based of this information? See the next episode to find out!

    Strategies: N/A

    Products Discussed In This Episode: /GL, /SI, /HG

    More like this

    tastytrade content is provided solely by tastytrade, Inc. (“tastytrade”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. tastytrade, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastytrade is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. tastytrade is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options, futures and futures options are not suitable for all investors. Prior to trading securities products, please read the Characteristics and Risks of Standardized Options and the Risk Disclosure for Futures and Options found on tastyworks.com. 

    tastytrade is a trademark/servicemark owned by tastytrade.

    tastyworks, Inc. ("tastyworks") is a registered broker-dealer and member of FINRA, NFA and SIPC. tastyworks offers self-directed brokerage accounts to its customers. tastyworks does not give financial or trading advice nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastyworks’ systems, services or products. tastyworks is a wholly owned subsidiary of tastytrade, Inc (“tastytrade”).

    tastyworks, Inc. (“tastyworks”) has entered into a Marketing Agreement with tastytrade (“Marketing Agent”) whereby tastyworks pays compensation to Marketing Agent to recommend tastyworks’ brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastyworks. tastytrade is the parent company of tastyworks. tastyworks and Marketing Agent are separate entities with their own products and services. tastytrade has different privacy policies than tastyworks.

    Quiet Foundation, Inc. (“Quiet Foundation”) is a wholly-owned subsidiary of tastytrade The information on quietfoundation.com is intended for U.S. residents only. All investing involves the risk of loss. Past performance is not a guarantee of future results. Quiet Foundation does not make suitability determinations, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of Quiet Foundation’s systems, services or products.

    © copyright 2013 – 2022 tastytrade. All Rights Reserved. Applicable portions of the Terms of use on tastytrade.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastytrade’s podcasts as necessary to view for personal use.