Market Curiosity: Exploring Markets And Systems

February 22, 2011

Backwardation update: More at the COMEX, slightly more at the LBMA

Filed under: Just Watching — Tags: , , , , , — Jeff Fitzmyers @ 8:56 pm

COMEX now has March 2011 silver trading 1.027 $/oz higher than December 2015. This is a 40% increase from about 0.73 $/oz Friday.

LBMA’s backwardation grew except for 12 months out which was 3% less.

IF the current LBMA backwardation is a fractal of the 2008 backwardation, a reasonable speculation is that price could rise about 20% from here over the next 2 weeks or so. Updated chart:

Gold still in contango:

“Wynter Benton” apparently encouraging hedge funds on how to easily make 20% every delivery month …Major hedge fund traders are going to be buying hundreds of millions of dollars of March contracts during the last 3 weeks of February. The strategy is simple-force Comex to pay a hefty premium on contracts that CANNOT be delivered. Will this work? It worked like a charm in December. Those guys were all kicking themselves because they should have bought 10 times the amount of contract that they actually had in December… This time around, they are getting everyone they know to get involved in this trade. They will pool their money together in order to get a large number of contracts so that Comex will not be available to deliver-thus forcing a hefty premium.

References:
+ LBMA’s growing backwardation could mean silver rising for at least 14 more days
+ Silver’s current focal point: March silver’s open interest

2 Comments »

  1. All the contracts are trading flat to backward right now. I’ve heard that silver has never gone into expiration in backwardation. Do you know if that’s true? The fact that it’s also a delivery month just makes it all the more unusual.

    Comment by silverflaunt — February 23, 2011 @ 9:51 am

  2. I have read that too, but don’t know if it’s true. Very interesting market right now to say the least!

    Comment by Jeff — February 23, 2011 @ 10:02 am


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