Backwardation???
From Minyanville:
This morning, gold officially went into backwardation for the first time since the announcement of the Washington Agreement in 1999, which sent gold shorts scrambling to find physical metal after the world’s major central banks agreed to limit sales of gold going forward and ended the one-way trade to the downside in gold that had been in place in the late 1990s.
Unlike other commodities, gold very rarely goes into backwardation: This only occurs when 1) The market fears a collapse in the currency, and/or 2) The market is worried about counterparties making good on their promise to deliver gold (which was briefly the case in 1999, when the Washington Agreement was announced and shorts were squeezed).
Normally, commodities will trade cheaper in the near months and more expensive in the farther out months. Tonight, that is not the case with Gold. Here are the closes of the active contracts. Gold closed for the day at 801.60!
Dec. 2008 - 792.0
Feb. 2009 - 791.2
Apr. 2009 - 750.4
June 2009 - 751.8
Dec. 2009 - 804.5
Dec. 2010 - 770.1
Stumble It!
[…] “is (a) blaring siren signaling trust in the Dollar is being lost. When I first mentioned Backwardation??? Gold closed for the day at 801.60! Rising precious metals and a falling dollar can’t be good […]