Friday, August 19, 2011

Gold Backwardation has arrived

Well, the time has come.

From ZH: "The near term August ’11 contract was trading at $1871.40/oz while June ’12 contract is trading at $1,870/oz (1216 GMT). The spread between spot and longer term contracts has fallen suggesting that gold may soon join silver in backwardation. The possibility of backwardation in gold suggests that major investors are concerned about the supply of physical gold. Buyers are concerned about securing supply in the future and are willing to pay a premium for spot or immediate delivery."

And there you have it. Nothing else to say. Must be a bubble.

9 comments:

  1. Holy mother of God!!!

    And take a look at silver bustin to the upside? Are you sure about that supposed 11am raid? Raid to what? $41? Sheesh.

    ReplyDelete
  2. My god, just took a look at the gold futures strip. Don't think I've ever seen it so fucked up looking. Not in full backwardation, but partial. Something is going on for sure.

    ReplyDelete
  3. The backwardation supports Sprott's thesis that the demand for gold is out stripping the suppy, check this out:"""When asked where the gold is coming from to supply market demand Sprott replied, “Well, it’s a great question and I struggle with it immensely, I struggle with it more every day. Central banks bought approximately 200 tons of gold in the first half of this year. One can assume that they will probably buy 200 tons in the second half of the year which would be 400 tons (total). Last year the IMF sold 400 tons and they haven’t sold any this year. We have in gold a 4,000 ton per year market, which is 2,600 tons of produced mined gold and about 1,400 tons of recycled gold. So that 800 ton change just at the central bank level would mean a 20% difference in supply/demand this year vs last year. But there is no extra supply. So it always begs the question, where is the gold coming from? As I just read today, the World Gold Council came out and said Chinese demand grew 38% in the second quarter and Indian demand grew 25%. I was reading today where the Dubai gold sellers say the business is up 100% and I keep wondering well, how can we keep having all of these big numbers, supply is flat, where is the gold coming from?""" http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/8/18_Eric_Sprott_-_The_Price_of_Silver_Should_be_$110_to_$120_Today.html
    IMO the flip side of this good news is the parabolic move suggests a flood of buyers, which will force investors/people to take notice! In S-Ontario the price of gold is hitting the news every night. It might take some time for the dumbed down population to notice :-)

    ReplyDelete
  4. The futures are telling me the markets are going to get rocked today unless we see a major reversal. I still think the Jackson Hole meeting is key. Tank the markets and then save the day with QE3. The heroine addict is crashing so let's stick another needle in his arm and get him high for a little while longer. I'd like to say the Fed will eventually run out of heroine, but they have a printing press.

    I loaded up on all my favorite juniors yesterday. Maybe I'll be buying more today if TPTB crush the markets again.

    ReplyDelete
  5. Just took a fuckton of SLV PUTS $41 strike for a hedge.

    ReplyDelete
  6. Bought some Sep $37 myself. Main reason was because I already had a few. Closed a few calls at the opening. Kinda hoping this raid does happen. Of course something usually happens around 9:30am (central) anyway.

    ReplyDelete
  7. I'm out on that move for a 1 hour profit of 50%. Thank you Blythe. This no goes straight into buying more physical. They we a little early on the sell signal, I was told 11, oh well.

    ReplyDelete
  8. Was that it? I think I'll wait a bit longer. That wasn't at all impressive.

    ReplyDelete