Imagine a Watchmaker who is in the process of negotiating a large sale to one of its best customers. The contract will not be signed for several months.

The Watchmaker must make a firm offer to the potential customer. However, the price quoted will necessarily depend on the most recent forward price of gold for delivery in 6 months.

The Watchmaker faces two possible outcomes:

yes: The contract is signed and the Watchmaker will need 1,000 oz of gold to begin production.
no: The contract isn't signed and the Watchmaker will have no immediate use for the gold.