1.   All the gold fulfilled maturing forward contracts where the contract price exceeded the spot price.

2.   However, one disadvantage of a forward contract is that it can not be cancelled without the agreement of both counterparties.

3.   In this chapter, we consider forward contracts and futures contracts, the differences between them and how they are priced.

4.   A forward contract is an agreement between two counterparties that fixes the terms of an exchange that will take place between them at some future date.

5.   In other words, a forward contract locks in the price today of an exchange that will take place at some future date.

6.   However, one disadvantage of a forward contract is that it cannot be cancelled without the agreement of both counterparties.

7.   In short, the forward contract is neither very liquid nor very marketable.

8.   But it is very different from a forward contract and has been designed to remove many of the disadvantages of forward contracts.

9.   However, the cost of achieving this has been to remove some of the advantages of forward contracts as well.

10.   This means that the details of the contracts are not negotiable as with forward contracts.