Big Gold Backwardation

Category: Market Reports
Author Name: Walter Pehowich
Posted: 12-28-2015 09:47:00 AM

Open interest in the December contract started this morning at 693 contracts.

December gold in a big backwardation this morning.

We start off the week looking at extremely light volumes in CME precious metal futures. But don’t look away from the screen for a moment, because this morning some strange things are happening.

If you are in the possession of CME gold receipts at the time of this report, or you have the bars to make receipts quickly, you can sell December gold futures and receive a $10 premium over spot. Open interest in the December contract started this morning at 693 contracts. At the time of this report, December / Feb gold switch is trading at better than plus $ 10.00 this morning. If you were watching the screen this morning, at one point December gold traded $27.00 over the February futures contract. So if you were watching the market and had gold receipts and or the capability of making up receipts quickly, you would have made a lot of money this morning.

At the time of this report, I am trying to find out what caused this unusual market backwardation. But at this point I only can speculate. I heard different opinions from gold traders this morning, but nothing definitive. My guess is someone or some company was not paying attention and got caught short in the December contract and now is paying up big time to get out of the position.

Platinum / Gold ratio now trading at $187 dollars. In from $230 dollars a week ago. You would be surprised to see how many traders participate in that market.

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About The Author

Author Name: Walter Pehowich
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