Home InfoVault Market Reports Big Gold Backwardation

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
This editorial has been prepared by Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not prove to be true, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept the foregoing.