You own a silver mine in carson city, Nevada. You sign to deliver 10 contracts of silver to the U.S. Mint in Denver, Co. in 6 months. Unsure of whether the U.S. congress will throw the U.S. into default and trigger another recession, you wish to protect your sale proceeds at the current spot price of silver.
a) How do you do this, assuming a middle man will charge you a nominal fee of $1000 for his services? ( show calculations)
b) Four months has gone by, and your mine has "played out"--you can't deliver on your contract. What do you do now?