Saturday, February 25, 2017

Trading gold in the sandbox

Everything starts by understanding sandbox transactions are  no arbitrage.  

In gold trading, that means a fulfillment contract, generated by the gold pit,  is assumed to be the exact delivery of gold dust to a thumbprint.  If it ain't, its gonna get hedged in the pit. Mass over time and distance, outside.  probability of events, inside. It is an artifact, once again, of auto trade and zero transaction costs.

So, a central bank on the gold standard is approximating the national yield curve with the prior history of actual gold shipments.  The sandbox produces the histogram of gold events, to the precision needed. Just pay the cycle fee and go scan the gold pits.

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