Unveiling the Enigma: Why Future Prices Tend to be Lower than Spot Prices
In the world of finance and commodities trading, the relationship between future prices and spot prices has long intrigued investors and analysts alike. It is a phenomenon that defies conventional wisdom, as one would expect future prices to be higher than spot prices due to the time value of money. However, empirical evidence consistently shows that future prices tend to be lower than spot prices. In this article, we will delve into the intricacies of this enigma and explore the key factors that contribute to this phenomenon.