Gold "Backwardation"

Discussion in 'Commodity Futures' started by Ghostland, Dec 5, 2008.

  1. What do you folks make of this?:

    Red Alert: Gold Backwardation!!!
    by Antal E. Fekete

    December 2, 2008, was a landmark in the saga of the collapsing international monetary system, yet it did not deserve to be reported in the press: gold went to backwardation for the first time ever in history. The facts are as follows: on December 2nd, at the Comex in New York, December gold futures (last delivery: December 31) were quoted at 1.98% discount to spot, while February gold futures (last delivery: February 27, 2009) were quoted at 0.14% discount to spot. (All percentages annualized.) The condition got worse on December 3rd, when the corresponding figures were 2% and 0.29%. This means that the gold basis has turned negative, and the condition of backwardation persisted for at least 48 hours. I am writing this in the wee hours of December 4th, when trading of gold futures has not yet started in New York.

    According to the December 3rd Comex delivery report, there are 11,759 notices to take delivery. This represents 1.1759 million ounces of gold, while the Comex-approved warehouses hold 2.9 million ounces. Thus 40% of the total amount will have to be delivered by December 31st. Since not all the gold in the warehouses is available for delivery, Comex supply of gold falls far short of the demand at present rates. Futures markets in gold are breaking down. Paper gold is progressively being discredited.\AEFRedAlert.pdf

    How do you think this might affect gold etf's?
  2. More total nonsense from delusional gold nuts.

    What is being defined as the spot price? The article doesn't say.

    As of EOD 12/05/08 London PM gold fix is $749.00. COMEX settle for Dec 2008 is $750.50 and for Feb 2009 is $752.20. All looks normal to me.

    As of 12/04/08 COMEX warehouses had 2.9 million oz of registered gold and 5.6 million oz of eligible gold for a total of 8.5 million oz.

    Why do the delusional gold nuts always ignore the eligible gold and the fact that it can easily be made registered gold?

    Why do the delusional gold nuts always assume that delivered gold is going to disappear somewhere?

    Total nonsense is total nonsense no matter how many times it is repeated.
  3. ljmlmvlhk

    ljmlmvlhk Guest

    Yes, have to admit, when I read the line…

    “Not one country will be spared from the fire and brimstone that once rained on
    the cities of Sodom and Gomorrah as a punishment of God for immoral

    I figured the author had a religious background, interpret that as - ‘religious nutter.’ Doom and gloom merchants, all of them, but saying that there may be a sceric of truth in there somewhere.
  4. Daal


    gold is a commodity with tons of investories and above ground stores. in backwardation the inventories have a big incentive to deliver and buy back cheaper in the deferreds, this tends to keep the market in line with a contango of a interest premium and storage costs
  5. sumosam


    daal, could you say that in english? i am still struggling with the futures lingo.:confused:
  6. Daal


    I'm no expert so I can't claim I'm not wrong. because there are plenty of gold above ground(most of the gold ever mined still exists) if you have a gold inventory and see the futures at Jan 09 $750 and Apr 09 $725 you have an incentive to deliver against the Jan and buy the gold(take delivery) to your inventory in Apr and pocket $25(plus the interest income on the money you got from the gold sale) risk free
    this tends to make the backwardation(discounts) opportunities not show up
  7. PaulRon


  8. nothing like the backwardation in silver..

    silver eagles going for $19 with spot at $9.50

    with 3 month delivery.
  9. Why? Silver = poor man's gold. And silver coins = broke investors' gold.. And every religious zealout who buys end of time is buying 1 oz silver coins for 200% value. Faith and belief never confirmed intelligence. Oh that and ebay live 30% offers that keep the prices too high on ebay.

    That said, anyone know anywhere I can get a 1 oz or 2 oz kookaburra for 30% over spot? I'll pay it just to have it.

    Look to for gold coins and bars ... The physical premium over spot on these small sizes is very palatable.

    On silver, you can buy 1000oz from for 59c over spot right now. But not too many poor folks don't buy 1000oz bars.
  10. Why do delusional gold/silver bugs always support their delusional point of view by quoting the prices in the moron market? has silver eagles for $3.99 over spot and not for limited quanties as minimum order is 500.

    Sunshine 1 oz silver rounds are $2.99 over spot and 1,000 oz silver bar is only 59 cents over spot.

    If you have the cash you can buy not just hundreds or thousands of ounces, but tons of gold and silver for small markups over spot or take delivery on futures contracts for spot.
    #10     Dec 6, 2008