Cash-and-Carry arbitrage is the simultaneous purchase of an asset and selling short futures on that asset to profit from pricing inefficiencies. The price of gold fluctuates based on supply, demand and buyer behavior. By engaging in the cash-and-carry synthetic lending strategy we would see a realized increase on the rate of return for delivery in 60 days?

There is an arbitrage opportunity for riskless profit by borrowing the money at a lower rate and then lending out with short futures at a higher rate. Once the market reaches equilibrium with the rising price of gold and the gold futures contracts falling, then no further arbitrage will be possible? What do you think ? 

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It is possible to profit from pricing inefficiencies through the cashandcarry arbitrage strategy as ... View the full answer