What does backwardisation mean for silver?

Filed under: Gold & Silver, US Dollar — peterjcooper @ 10:06 am

silveralertprofilelogoAntal E. Fekete, a professor at Intermountain Institute of Science and Applied Mathematics, and frequent writer on precious metals, answers a timely question:

Q: People from around the world keep asking me what advance warning for the collapse of our international monetary system, based as it is on irredeemable promises to pay, they should be looking for.

A: My answer invariably is: ‘watch for the last contango in silver’.

It takes a little bit of explaining what this cryptic message means. Contango is that condition whereby more distant futures prices are at a premium over the nearby. The opposite is called backwardation which obtains when the nearby futures sell at a premium and the more distant futures are at a discount.

When contango gives way to backwardation in all contract spreads, never again to return, it is a foolproof indication that no deliverable monetary silver exists.

Silver price hike

Thank you professor! This is really an extension of the argument on this website dating back to before the summer rout of precious metal prices.

This means that the bullish trend is in most probability dying out. Similarly if the commodity chart is making a lower low but the CCI indicator is making a higher low than this means that the bearish trend is ending.

These are some ways in which the commodity technical indicators are used but they are not fool proof. You need to use them on Bitcoin Code along with the support and resistance levels to use as a confirmatory tool.

Trading the equity market is also a game of probabilities and the equity indicators make it possible to increase the probability of the trade working out. The equity market traders use the technical indicators to increase the trade probability.  There are a number of buying and selling opportunities

Physical stocks are low and the futures price has been distorted by big hedge fund forced-sales – now we are coming to the day of reckoning when the physical shortage starts to determine the spot price, and not the futures market.

The upside – which should have been there all along – will now come back with a vengeance and smash the few remaining shorts. This is likely to be spectacular – but after the culling of bulls recently not all precious metal fans will be there to benefit.
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