Gold Forward Offered Rate chart published on Britain’s leading precious metals website
The Gold Forward Offered Rate (GOFO) is the swap rate for a gold-to-U.S. dollar exchange. It is not the price to lease gold but rather the price to swap gold for U.S. dollars. Effectively it is the interest rate on a US dollar loan secured against gold. As such, it may be interpreted as the difference between the US dollar rate (Libor) and the gold lease rate.
Usually, GOFO is positive, which means that the price of gold for delivery in the future is higher than the spot price, i.e., there is contango in the bullion market. Meanwhile a negative GOFO indicated a shortage of metal liquidity for leasing and tended to precede rallies in the gold price.
These charts on info.sharpspixley.com are updated daily by Monetary Metals’ data science platform. Monetary Metals has developed a proprietary method of calculating indicative rates with high accuracy, based on public market data.
“These charts are a welcome addition to our website giving investors and traders alike signals and indicators to support views on where the gold and silver prices might be headed” said Ross Norman, CEO of Sharps Pixley.
“Gold users need GOFO, but the London Bullion Market Association stopped publishing it in January 2015” said Keith Weiner, CEO of Monetary Metals. “We are excited to partner with Sharps Pixley to provide this essential signal to the UK market,” he added.
Monetary Metals compares its gold forward rate to the LBMA data series between 1996 and 2015. Its 6-month GOFO has better than 0.99 correlation. The company also describes how it calculates the rate.
About Monetary Metals
Monetary Metals® is Unlocking the Productivity of Gold® by offering a Yield on Gold, Paid in Gold® to investors, and Gold Financing, Simplified™ to gold-using businesses. The company manages the Gold Exponential Fund™, which provides a way for investors to own gold and earn a yield, by trading between gold and silver. Monetary Metals publishes groundbreaking research to help investors understand the emerging role of gold as the ultimate measure of wealth, including the MM GOFO™ gold forward rate.
About Sharps Pixley
The Sharps Pixley name goes back to 1778 and was originally founded through the merger of two London bullion businesses. Sharps Pixley was formerly a central player in the London gold and silver bullion broking community as an original gold fixing member and chairman of the silver fix. Today the business is wholly-owned by one of the wealthiest families in Germany and sits within the DEGUSSA group of businesses, said to be one of the largest sellers of retail gold in Europe.