PMs: Jame Turk - Silver Backwardation for Years, Possible Hyperinflation

[bobbyw24]

King World News has received word from James Turk that silver is in extreme backwardation. Turk stated, “There is a huge story that is brewing. Silver is in backwardation to 2015, which is 13-cents cheaper than spot. This is unbelievable. Money does not go into backwardation except ‘in extremis’!”

Continues


http://kingworldnews.com/kingworldn...ation_for_Years,_Possible_Hyperinflation.html

 

[pmbug]

Trader on another forum where I re-posted that story offered this response:

yeah im not sure i would call this extreme backwardation. but hey, thats just me.

White: Live data

Green: yesterday

Orange: last week

in fact as of today the curve has moved back into slight contango

Turk meant extreme in that it was in complete backwardation (all months), not that the degree of backwardation was extreme. Still, I think as we get closer to March it's going to get more interesting. I check Harvey's blog every night to keep tabs on the story.

 

[bobbyw24]

Trader on another forum where I re-posted that story offered this response:

Turk meant extreme in that it was in complete backwardation (all months), not that the degree of backwardation was extreme. Still, I think as we get closer to March it's going to get more interesting. I check Harvey's blog every night to keep tabs on the story.

Harvey's Blog looks interesting. Thanks

 

[japes]

I guess this kind of backwardation is pretty rare!

http://en.wikipedia.org/wiki/Normal_backwardation

Backwardation very seldom arises in money commodities like gold or silver. In the early 1980s, there was a one-day backwardation in silver while some metal was physically moved from COMEX to CBOT warehouses.[citation needed] Gold has historically been positive with exception for momentary backwardations (hours) since gold futures started trading on the Winnipeg Commodity Exchange in 1972

 

[raystone]

http://www.youtube.com/watch?v=h66R4U-Eybs&feature=player_embedded#at=17

Insider news as to why silver and gold are going to go ballistic

 

[juvanya]

What is backwardation? Is it normal? Good for physical silver purchasers?

 

[hugolp]

What is backwardation? Is it normal? Good for physical silver purchasers?

Its not normal in the metals market. It means people is not willing to lend the metal at interest because they do not trust that will get the metal back, which means there is (or people suspect there is) metal scarcity at present prices.

The fact that there is backwardation in the metal market points towards gold and silver manipulation and also towards complete distrust in paper currency (or both together).

 

[raystone]

What is backwardation? Is it normal? Good for physical silver purchasers?

http://www.zerohedge.com/article/silver-bullion-backwardation-suggests-supply-stress

Backwardation is when the market quotes a lower price for spot delivery or a more nearby delivery date, and a higher price for a distant delivery date in the futures market. It indicates that buyers are concerned about securing supply in the future and are willing to pay a premium for spot delivery. It suggests that silver bullion in volume is difficult to buy and that the physical market is stressed and becoming less liquid.

Backwardation starts when the difference between the forward price in the futures market and the spot price for physical delivery is less than the cost of carry, or when there can be no delivery arbitrage. This is generally because the asset is not currently available for purchase or is increasingly illiquid.

It can end in default, failure to make delivery, and in sharply higher prices.

Backwardation rarely happens in the gold and silver bullion markets. Since gold futures first started to be traded in 1972 (on the Winnipeg Commodity Exchange), there have only been momentary backwardations of a few short hours.

The extent of the backwardation in silver is unprecedented. It suggests that retail investment and industrial demand internationally is very robust and the small silver bullion market cannot cater to the level of demand for refined coin and bar product.

 

[juvanya]

So the opposite is the normal? Lower price in the future?

 

[hugolp]

So the opposite is the normal? Lower price in the future?

No. It means the metals are scarce at this price. So, higher price in the future.

There could be corrections, in the present climate there will be a lot of volatility, but for the medium long term this guarantees higher prices in the future.

 

[juvanya]

Ohhhhhh Ok i get it now... I think.

 

[pmbug]

The future price is currently lower, but only because the market lacks confidence that future contracts will be delivered. The market is looking for immediate delivery.

Bird in the hand is worth two in the bush.