silver backwardation nearly doubles in the last 2 weeks (default coming closer)

[Large Sarge]

Silver Backwardation NEARLY DOUBLES in Past 2 Weeks!
Silver backwardation is suddenly vaulting while silver consolidates in the upper $30's.
In our July 28th update, silver backwardation in back month contracts had increased to a 0.781 discount on front months.

With Thursday's close, silver remains trading in contango from front months through the July 2012 contract, and enters backwardation with the September 2012 contract.
Backwardation is skyrocketing in from the Sept 2012 contract on out however, with the July 2016 contract trading at a $1.241 discount to front months!

As we have stated previously, we believe that this increase in silver backwardation is a result of COMEX default risk, and not dollar aversion.

The fact that back month backwardation continues to increase while silver has corrected $5 indicates that traders want their silver NOW, they are not comfortable holding a contract that matures further than 12 months out.
We will continue to monitor the situation and update our readers to any significant changes or moves.



Daily Settlements for Silver Futures (FINAL)Trade Date: 08/11/2011
Month




Settle Estimated
Volume Prior Day
Open Interest
AUG 11




38.656 248 15
SEP 11




38.669 56,062 43,721
OCT 11




38.687 52 32
DEC 11




38.704 11,948 39,049
JAN 12




38.710 3 142
MAR 12




38.717 751 6,433
MAY 12




38.705 74 2,225
JLY 12




38.686 14 1,952
SEP 12




38.651 18 299
DEC 12




38.584 94 8,356
JAN 13




38.557 - 1
MAR 13




38.495 - 435
MAY 13




38.449 - 35
JLY 13




38.375 5 2,210
DEC 13




38.255 286 6,900
JLY 14




38.027 - 232
DEC 14




37.909 - 1,186
JLY 15




37.677 10 156
DEC 15




37.535 16 488
JLY 16




37.415 - 38
Total





69,581 113,90

<add link, JQP>: http://silverdoctors.blogspot.com/2011/08/silver-backwardation-nearly-doubles-in.html

[Neuro]

My interpretation is that there is fear of COMEX default, but it is not an immediate concern since it takes almost 2 years into the future before Silver goes into backwardation. Unless you have backwardation in the immediate months, I wouldn't go in and buy extra. Of course if silver goes down further from this point, the situation can change rapidly, with an increased shortage for delivery...

Certainly long term silver will be an excellent buy, but I think a better buying point will be found within the next couple of months.

[Ponce]

The beach ball is about to pop out of the water.......move out of the way or you might get hit on the face.

[mej]

so get your dime rolls now

[osoab]

Large Sarge, is this from Harvey Organ? Link please.

[Spectrism]

This looks like another signpost along the way to the zombiezone.... perhaps a 2013-2014 convergence. And, if we make it that long, 2015 is looking mighty grim.

[Twisted Titan]

Mark my words

The supression of silver is so violent that when it finally unwinds gold and silver will one day trade at parity with one another

a ounce of gold can be exchanged for a ounce of silver....the only mystery is the price

[osoab]

Mark my words

The supression of silver is so violent that when it finally unwinds gold and silver will one day trade at parity with one another

a ounce of gold can be exchanged for a ounce of silver....the only mystery is the price


Your too pessimistic TT. I look for Ag to be 2 times Au minimum.

[Shami-Amourae]

Mark my words

The supression of silver is so violent that when it finally unwinds gold and silver will one day trade at parity with one another

a ounce of gold can be exchanged for a ounce of silver....the only mystery is the price

I disagree. I think people will trade their Silver for Gold when it drops below a 30:1 ratio, forcing the ratio gap to be larger. I'd start swapping if it went below 20:1 for sure. I wouldn't swap all of it, just swap a certain percentage based on the ratio.

I hope like Hell your right though, since myself and many others on this forum will become mega rich if that happens.