Silver is in backwardation extending twelve months forward

[Serpo]

James Turk has alerted King World News that silver is in backwardation. Turk spoke with KWN saying, “Silver is in backwardation which is an extremely important development. Most are aware that when backwardation occurs, the spot price is higher than the futures price. Backwardation happens regularly in most commodities, but it is rare in the precious metals.”


“Silver is in backwardation not just in the short-term, this time it is extending twelve months forward!


The last time this happened Eric was in January of 2009. Over the next few weeks silver rose from about $10.50 to $14.50, a roughly a 40% move higher. The key to understanding backwardation is that the price must rise to entice holders of physical metal to sell and accept a national currency in return. I think we can expect a similar event to repeat over the next few weeks.


A similar type of move would clearly put silver well above its previous high. What this backwardation shows is that there is a disconnect between the physical and the paper markets in silver. As I said previously, the silver shorts simply cannot hold the paper price down here any longer without seriously discrediting the paper silver market as a price discovery mechanism.


Gold is not in backwardation, nevertheless the demand for physical gold is extremely intense. With the sentiment indicators at very low levels, it suggests we are about to see a stunning short covering rally in gold.”


Weakness in the metals can end as quickly as it began. When the metals turn, this next move should be breathtaking.


http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/1/21_James_Turk_-_Silver_in_Backwardation%2C_Set_to_Explode.html

[tater]

The last contango? Antal Fekete always said it would be silver first.

[Serpo]

The last contango? Antal Fekete always said it would be silver first.


Sounds a bit like a dance dosnt it....

[Neuro]

Yeah this is a hyperbullish indicator! ;D ;D

[tater]

The last contango? Antal Fekete always said it would be silver first.


Sounds a bit like a dance dosnt it....


Yes, it does :D. Fekete back in June of 2006.

http://www.24hgold.com/english/contributor.aspx?contributor=Antal%20E.%20Fekete&article=400280260F8350

The Last Contango

...People from around the world keep asking me what advance warning for the collapse of our international monetary system, based as it is on irredeemable promises to pay, they should expect. My answer invariably is: “watch for the last contango in silver”.

It takes a little bit of explaining what this cryptic message means. Contango is that condition whereby more distant futures prices are at a premium over the nearby. The opposite is called backwardation which obtains when the nearby futures sell at a premium and the more distant futures are at a discount. When contango gives way to backwardation in all contract spreads, never again to return, it is a foolproof indication that no deliverable monetary silver exists. People with inside information have snapped it up in anticipation of an imminent monetary crisis...

[Neuro]

One important thing to realize is that, paper prices can continue to fall, even the near future spot prices, once a sufficient number of players at COMEX and LBMA realizes that there is a very small likelihood of getting delivery of real silver, even if their purpose isn't to take delivery, buyers and longs will abandon the exchange, never to return. Last time around the paper exchange for silver was saved, by the 40% rally in silver in just a few weeks, there is NO GUARANTEE it will play out like this, this time around, especially not if we indeed saw the LAST contango in silver, just prior to current backwardation, the backwardation could potentially continue worsening until COMEX and LBMA implodes and collapse on itself...

[YukonCornelius]

Laugh. Out. Loud.

[tater]

Laugh. Out. Loud.


Whatchu laffin at Willis ;D

I'm a RMPL kinda guy, sure would like to read your thoughts on the matter. 8)

[YukonCornelius]

My apologies. I was thinking backwards (pun sort of intended). I see silver 50+ within a year or two.

[tater]

My apologies. I was thinking backwards (pun sort of intended). I see silver 50+ within a year or two.


No worries, I'm awful slow sometimes. I wonder, just how long they can kick the can down the road? $50 sounds fine to me ;D.

[Ponce]

Like a sling shoot silver is going back in order to obtain more power and shoot forward like a bat out of hell.

[Sparky]

...

Yes, it does :D. Fekete back in June of 2006.
...
When contango gives way to backwardation in all contract spreads, never again to return, it is a foolproof indication that no deliverable monetary silver exists. People with inside information have snapped it up in anticipation of an imminent monetary crisis...



I call foul. At no time can you know that something has occurred never to return again, so this is not a helpful indicator at all.

[tater]

...

Yes, it does :D. Fekete back in June of 2006.
...
When contango gives way to backwardation in all contract spreads, never again to return, it is a foolproof indication that no deliverable monetary silver exists. People with inside information have snapped it up in anticipation of an imminent monetary crisis...



I call foul. At no time can you know that something has occurred never to return again, so this is not a helpful indicator at all.


From the article.

...“Last contango” does not mean that the available supply of monetary silver has been consumed by industrial applications, as trumpeted by the cheerleaders of the get-rich-quick crowd. Such a notion is at odds with the fact that silver has always been, and still is, a monetary metal. Huge stores of monetary silver still exist, but are kept out of sight and availability by their current owners who, for obvious reasons, want to remain anonymous. “Last contango” is the endgame in the grand poker play. The government exiled silver to the futures market in a forlorn hope that it will drown there in a sea of paper silver. But the silver corpse still stirs. People are withdrawing ever gtreater chunks of cash silver from exchange-approved warehouses. The money doctors run scared. If futures trading in silver is unsustainable and will end in a default, then the flimsiness of the house of cards built of irredeemable promises will be exposed for all to see. The money doctors, led by Helicopter Ben, will follow the example of the 18th century Scottish adventurer John Law of Lauriston. He left Paris in a hurry. In a disguise. Disguised as a woman...

I understand what you're saying and I can't argue with your logic. But I'm guessing what the professor is saying is that when you see the boogie man's head cut off and it's body burned then one can honestly believe that it's dead to never return. He's probably never seen Nightmare on Elm Street though.

[wahahahz]

What's the use? Silver was nuked in the past three weeks. Down by more than 4 dollars...Yesterday USDX was down but silver was still flat at the monthly low. :(

[Neuro]

What's the use? Silver was nuked in the past three weeks. Down by more than 4 dollars...Yesterday USDX was down but silver was still flat at the monthly low. :(
The reason we are in backwardation right now is because silver has been nuked the past three weeks, they sold vast amounts they don't have... Dollar just started trending lower, once it starts plunging, it will trigger the PM sling shot...

[wahahahz]

What's the use? Silver was nuked in the past three weeks. Down by more than 4 dollars...Yesterday USDX was down but silver was still flat at the monthly low. :(
The reason we are in backwardation right now is because silver has been nuked the past three weeks, they sold vast amounts they don't have... Dollar just started trending lower, once it starts plunging, it will trigger the PM sling shot...

"A squeeze [of short-selling traders] failed to materialize," says one London trader of Wednesday's action, something that "the whole market [was] talking about" in Thursday's Asian trade, according to a Hong Kong dealer.

"This [physical shortage] is definitely not the case in Asia," he adds, however. "So what is all these fuss about?"
http://goldnews.bullionvault.com/gold_price_012020115

Is there really a short squeeze which is going to happen?

[cthulu]

Doesnot matter. They will just print so many shares of slv and short it the price of silver falls back to 20 and everyone will jump for the fiat train. All aboard!!!

[Neuro]

Doesnot matter. They will just print so many shares of slv and short it the price of silver falls back to 20 and everyone will jump for the fiat train. All aboard!!!
I hope so, a last buying opportunity!

[JDRock]

...

Yes, it does :D. Fekete back in June of 2006.
...
When contango gives way to backwardation in all contract spreads, never again to return, it is a foolproof indication that no deliverable monetary silver exists. People with inside information have snapped it up in anticipation of an imminent monetary crisis...


America as a pm centered economy, gone in 1914 NEVER to return.

I call foul. At no time can you know that something has occurred never to return again, so this is not a helpful indicator at all.

[gunDriller]

i think the silver market is so thoroughly manipulated that the price does not give much information about the physical availability of metal.

other than that a higher price will make some mining operations profitable that were not previously profitable.

i don't know the numbers for silver so i'll use the numbers for gold.

30 grams of gold per ton of ore used to be typical. now it's 10 grams of gold per ton of ore.

in order for the mines to keep up with demand, it doesn't work if the price is determined by a futures market that keeps the price artificially low. the mines don't have the incentive to work lower-yielding claims, e.g. 5 grams of gold per ton.

long story short ... well it's already been said 8 million times. physical default.

like the man said, "crash JPMorgan, buy silver".

[Neuro]

What is interesting is that when a COMEX physical default, becomes a commonly accepted reality. The papershorts (JPM, HSBC, etc.) will make out like trolls. The buyers of papersilver will go away, and only sellers remain, thus price will plunge, the shorts will be able to buy back what they issued at cents on the dollar...

[Spectrism]

What is interesting is that when a COMEX physical default, becomes a commonly accepted reality. The papershorts (JPM, HSBC, etc.) will make out like trolls. The buyers of papersilver will go away, and only sellers remain, thus price will plunge, the shorts will be able to buy back what they issued at cents on the dollar...


Interesting observation. That is a possibility. But that would require a total meltdown of the paper trade.

Because of the rampant corruption in everything official... the black market will be the only true market.

[Neuro]

What is interesting is that when a COMEX physical default, becomes a commonly accepted reality. The papershorts (JPM, HSBC, etc.) will make out like trolls. The buyers of papersilver will go away, and only sellers remain, thus price will plunge, the shorts will be able to buy back what they issued at cents on the dollar...


Interesting observation. That is a possibility. But that would require a total meltdown of the paper trade.

Because of the rampant corruption in everything official... the black market will be the only true market.
Yes, expect the government, for the purpose of "restoring order" in the PM market, to go in and ban all trading in PM's, and offer a "fair" price for PM's to those who wants to sell. How does $1000 for gold and $20 for silver sound? Blame the downfall on a few corrupt traders, in the middle, who'll get prison sentences... The top bankers makes a windfall, and walks away free.

I would like to hear why this scenario will not play out like that.

[JDRock]

Interesting observation. That is a possibility. But that would require a total meltdown of the paper trade. THIS is assured.

Because of the rampant corruption in everything official... the black market will be the only true market.
[/quote]
the blk market is already the only true market.

[messianicdruid]

What is interesting is that when a COMEX physical default, becomes a commonly accepted reality. The papershorts (JPM, HSBC, etc.) will make out like trolls. The buyers of papersilver will go away, and only sellers remain, thus price will plunge, the shorts will be able to buy back what they issued at cents on the dollar...


Interesting observation. That is a possibility. But that would require a total meltdown of the paper trade.

Because of the rampant corruption in everything official... the black market will be the only true market.
Yes, expect the government, for the purpose of "restoring order" in the PM market, to go in and ban all trading in PM's, and offer a "fair" price for PM's to those who wants to sell. How does $1000 for gold and $20 for silver sound? Blame the downfall on a few corrupt traders, in the middle, who'll get prison sentences... The top bankers makes a windfall, and walks away free.

I would like to hear why this scenario will not play out like that.

What sellers? Nobody will sale for those "dollars".

[Neuro]

What is interesting is that when a COMEX physical default, becomes a commonly accepted reality. The papershorts (JPM, HSBC, etc.) will make out like trolls. The buyers of papersilver will go away, and only sellers remain, thus price will plunge, the shorts will be able to buy back what they issued at cents on the dollar...


Interesting observation. That is a possibility. But that would require a total meltdown of the paper trade.

Because of the rampant corruption in everything official... the black market will be the only true market.
Yes, expect the government, for the purpose of "restoring order" in the PM market, to go in and ban all trading in PM's, and offer a "fair" price for PM's to those who wants to sell. How does $1000 for gold and $20 for silver sound? Blame the downfall on a few corrupt traders, in the middle, who'll get prison sentences... The top bankers makes a windfall, and walks away free.

I would like to hear why this scenario will not play out like that.

What sellers? Nobody will sale for those "dollars".
I expect you are right, just like very few people handed in their gold after FDR nationalized and made it illegal to trade...