Market Curiosity: Exploring Markets And Systems

April 26, 2011

Silver still in backwardation. Just waiting for the correction to end.

Filed under: Just Watching — Tags: , , , , , , , , — Jeff @ 11:34 am

James Turk: The important point Eric is that silver is still in backwardation. I mentioned to you previously in the KWN blog piece on April 1st of this year that if silver remained in backwardation when we neared the $50 area it would be a truly extraordinary event. Here we are with silver touching $49 in Asian trading this morning, yet it remains in a 63 cent backwardation from spot to December 2015.

I can’t stress enough how significant that event is. Over the past three months the price of silver has nearly doubled, yet the backwardation has not disappeared. Markets are not designed to work that way, the higher price is supposed to entice people to sell their physical and hold dollars instead. I think the market is quite clearly sending the signal that people would rather hold silver instead of paper money.

The bottom line is that as long as silver remains in backwardation, price declines will be short-lived, it’s also telling us that silver has not yet reached a top on this move.

In fact, LBMA is going into backwardation again indicating that significantly rising silver prices have

Comex partial backwardation is alive and well.

Starting to notice that SLW calls are coming down in price a fair bit. hmmm… Curious if SLW might go down to 35.50 ish briefly and then the far out of the money SEP calls might be attractive??

Hows the dollar index? Surely it popped up a lot when “real money” dropped yesterday?? Well, no. It went down.

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