silver backwardation?

[Steal]

The rules of the comex states that if silver or gold is served upon, it must come from the dealer inventory and then withdrawn

This did not happen yesterday. Then how could 97 contracts disappear? This is 485,000 0z of silver which represents approx. 8.7 million usa dollars worth of silver.

The owners of these long positions having plucked their money down on July 1.2010 surely would not give up this late in the game and also having surely witnessed the chaos at the silver comex. Something happened and if I am a betting man,

it looks like these guys got a huge cash settlement instead of taking the metal. There is no other explanation.

Silver is now in backwardation as players are getting more for the silver in the front month than in future months.

We are witnessing the leasing of silver metal by the customer to the dealer for a huge premium and now settlement for huge dollars instead of taking the metal.

The silver comex is in crisis.

The amount of silver standing in this delivery month of July is as follows:



1.4 million oz (283 contracts) left to be served+ 11.2 million oz (22 54) + .200 million oz of silver options exercised) = 12.8 million oz of siver.

(the other 485000 oz of silver was cashed at a premium)


Harvy Organ 7/24 (http://harveyorgan.blogspot.com/)

[gunDriller]

i don't understand backwardation but i thought this version of Harvey's blog was real interesting.

sounds like he's expecting Comex default "any day now", but he doesn't present any reason why they can't keep twisting customers' arms to keep their strange game going.

i guess the clincher is demand for physical, there's no way to ship 100 ounce holograms of a silver deliverable Comex bar.

maybe i should apply for a patent on that concept and try to sell it to Comex - they might go for it ! ;D


about 2 months ago there were major shortages at dealers like APMex, where they basically had no random year 1 ounce gold coins. that has been thoroughly remedied. there is no shortage condition there.

what will the COMEX physical shortages look like on the retail end ? just basically "out of stock" signs everywhere - or just on the bigger COMEX deliverable bullion, like 100 ounce silver bars and i'm not sure what the deliverable size is for gold. 10 ounces ?

[Saul Mine]

It costs to store metal for a future contract, so the future price tends to be higher than the current month price. That is called contango. When the current price is higher than the future price that indicates people want immediate delivery of physical metal and will pay more for it. That is backwardation, and it is abnormal.

[SLV^GLD]

There cannot be a default if cash settlements are accepted. Only when the promised physical is demanded and cannot be delivered will the default condition arise. What's your price to settle?

[joe_momma]

The other way to settle a contract (other than delivery from physical holdings or from unallocated reserves or by cash) is to use the silver entrusted to the bank and held in an allocated account. There is a special word for this - EMBEZZLEMENT -

Extend and pretend works in the FRN banking world, the banksters are just taking things to the next level - they've already used up their holdings, the unallocated reserves that have been "leased", and new material from producers - the only way to cover their naked shorts is to "inadvertently" divert from the allocated holdings and hope no one asks for their metal.

[Large Sarge]

this deserves a big bump

combined with mamboni's audio interview of Jim Willie