Market Curiosity: Exploring Markets And Systems

February 26, 2011

Silver, backwardation update for Feb 26th

Filed under: Just Watching — Tags: , , , , , , — Jeff Fitzmyers @ 9:51 am

James Turk on King World News: During the most illiquid time of the trading day, somebody decided to take out all of the stops in silver… The important point Eric is that no technical damage was done and in fact the situation has become even more bullish because that little smack down overnight took out all of the weak hands… With this month’s important options expiry now behind us, I’m looking for higher prices next week. Even though the March/May spread has flattened a little, the backwardation continues to grow to 2015 and has ballooned further to $1.16. The short squeeze is continuing to develop. The shorts are trapped and whether the trap springs this week or in a month or two I don’t know, but we are getting very close.

2008 backwardation:

2011 backwardation: It seems at least twice as significant compared to the 2008 backwardation.

Again, IF the fractal is a repeat, possibly expect silver to rise to 40-46 $/oz over the next 20 trading days, if the LBMA 12 month SIFO does not make a new low. That’s only about $0.50 /day.

UPDATE March 3: I have some mistakes on the chart. This one is correct. The following 1 is not correct. A similar price rise for 2011 targets 38 $/oz.

Scotia Mocatta now only out of 100 oz bars.

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