Futures Curves Gone Wild: Backwardation Or Chaostango?

Tyler Durden's picture

Recently, the silver futures curve "normalized" for a while. Well, the "while" is over. It's backwardation deja vu, all over again. Or not quite...

From this (yesterday)...

...To this (today).

In a word (or two) - total chaos. With HFTs preparing to leave the Shiti stock churn, it appears the momo quants have now doubled down on silver. Only this time someone's vacuum tube is about to get burned badly.

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smlbizman's picture

man, your words are metamucill....i just wished i knew wtf they meant...

nonclaim's picture

Nothing to worry about, Bernanke will fix this in 15min --if he stops twitching on the floor in a fetal position asking for mom.

boricuadigm-shift's picture

Let me correct you Tyler... It's chaoswardation!! :-)

wandstrasse's picture

credit max Keiser talking about deflation/inflation:


johngaltfla's picture

It means the quants are applying razor sharp nipple clamps on Jamie Dimon's short position on silver and twisting violently.

Cdad's picture

cntrl alt del sv.  

There.  Fixed...bitchez!

High Plains Drifter's picture

ah, here we are again, another chart reader trying to explain silver.   sir, silver is not SLV. SLV has no product, kapiche?  ask harvey.....

downrodeo's picture

+1000 THANK YOU!! God it gets so frustrating. I feel like a mental patient banging my head against a wall sometimes.

Vendetta's picture

hey, what bout those paper receipts sitting in the vault?  That's silver ain't it?  The paper weighs almost as much as the real stuff ... so its physical ...

Gordon Freeman's picture

You are a fucking idiot.  "Typical pre-crash pattern"??

With your gift of seeing the future, why aren't you the richest man alive?  Fuck you.

Phillips Capital's picture

Don't curse man's desire to pattern-fit. technical analysis and pattern recognition can help sometimes, not all the time. thanks for the PDFs.

hack3434's picture

Now tell us how you REALLY feel

SuperRay's picture

Gordon...Gordon...why the anger? do you have a personal issue with him?  Do some yoga or find yourself a good psychoanalyst...you'll drop dead and miss all the fun at this rate..

N_Jones's picture

As Dr. Who so succinctly put it "... Silly humans, always looking for patterns where none exist."


oh yea..... Silver Bitchez... :)

SheepDog-One's picture

This same troll has been here for about 7 days, a few different names.

MCHedgeHammer's picture

trolls? come on man, market participant is the preferred name.

narapoiddyslexia's picture

Some sovereign psyops are no doubt floating around. BTW, I have a question. If you were China [metaphorically, of course] and you had $3T depreciating dollars, and you were really, really pissed that Uncle Ben was making you finance the US DOD via depreciating your trillions of dollars, what would you do?

SuperRay's picture

nara, you should have added, and those same motherfuckers were trying to steal your oil and undermine your play for african commodities, and any day now were going to blow the shit out of a country you're trying to get in bed with (Iran), and your national temperament gave you a propensity to think long term instead of quarterly, what would you do? Then I guess what you would do is be patient, because those assholes will implode momentarily...

narapoiddyslexia's picture

Thank you, I overlooked those other things. Would you buy silver? Under the hypothetical situation, of course.

narapoiddyslexia's picture

And there is this - 


It was scrubbed from the US gov web site after it came to be noticed.

Sock Puppet's picture

Hey don't be blowing my cover bro!!!!!!!!

JNM's picture


I have not had time yet, to review all the links you have shared, but I did read the last one.

I hope you realize, that that document proves that Silver is in fact, not in a bubble, by the author's definition of a bubble.

I would like you to consider these two points:

1. Using daily data since low in 2008 of SLV, the best fit exponential model is

dp/dt = 0.987p^0.0054, which is in fact, a decaying exponential indicating a mathematical bubble has not yet formed.

2. A qualitative review of the books published on Silver via an Amazon book search sorted by year published, suggests no bubble like formation.

And, my anecdotal $0.02, google trends indicates the moving average for searches of gold, to searches of silver, is at an all time high, while the searches for silver are unchanged over 7 years.

I'm in the Jim Rogers camp on this topic.

JNM's picture

I'm sorry, please forgive me, there was an error in my numerical methods.

The model above, is not correct.

It's escaping me, right now, as to how to handle the negative price changes when modelling a differential of the form dp/dt = ap^x.

So, I went conservative.  I took the same data set, and made the negative price changes positive, and I still couldn't get a good model of the form dp/dt = ap^x.

Anyway...I'm done here.

Attitude_Check's picture

You have to modify the exponential to a complex exponential with a phase term.  That would require some modifications to the paper I think.  I haven't dug deeply into this however.

Vendetta's picture

if you multiply by the square root of the k factor, it might work.  K factor represents the mathematical notation for an event called 'black swan', once you find its numerical value .. you will have your answer

TwoShortPlanks's picture

Here ya go boys, enjoy yourselves.


I'm off to get a drink too.

ivars's picture

"google trends indicates the moving average for searches of gold, to searches of silver, is at an all time high, while the searches for silver are unchanged over 7 years."

That is one of proofs its not a bubble which everyone would by into. But market cornering create bubbles public is not aware of.


goldfeed's picture

Does all this mean; your guess is as good as mine?

gmrpeabody's picture

Silver bitchez...

JPDG's picture

I'm going to press "help" for explanation. 

Whatta's picture

I tried that...but "help" was connected to the "reelect zerObama" contribution hotline.

"Give till you bleed, or at least until I find another war to start. War, bitchez." - Oh-Bomb-Uh, Nobel Peace Prize winner

Misean's picture

"it appears the momo quants have now doubled down on silver."

If so, the paper silver market should be destroyed.

High Plains Drifter's picture

the paper silver market is a criminal activity at best. there simply is not enough product to back up all of the paper silver shares sold.  they dance with the devil. so let them burn.

cbaba's picture


They(Banksters A.K.A. FED,GS,JPM,MS, BOA,CB,DB etc..) Created Comex at the same year we left the gold standard(1971), the idea behind was to corner Gold and Silver market, control their price so that they can print as much dollars they want.

The Game is Over.

The Silver is the first real hole in this price manipulation going on for 40 years and it will become bigger and bigger every day, it will take Gold and other precious metals with it and Dollar will crash.



Vendetta's picture

+47.  I noticed that little 'tidbit' some time ago ... cause and effect baby

firefighter302's picture

"They dance with the devil, so let them burn."

Exactly. Well said.

gordengeko's picture

"Ever dance with the devil in the pale moonlight?"  Damn right I do!  That's what it takes sometimes, have to learn their ways, learn how they think, to figure out how to beat them at their own game.  That's why I'm grateful for sites like ZH.  If it wasn't for people willing to step in the pit of vampires and battle wills with the scum of the planet, we wouldn't have this knowledge.  The financial area is what theya re using to control humanity, everything is an illusion based on the avg human's ignorance.  Until that veil is lifted and we can surplant with new leaders that build humanity up instead of exploiting them for their own sick purpose, we stand no chance of survival as a species.

PeaBird's picture

I think that is what this chart today is telling us, is that the basis to totally fucked up and all over the place, with a bias toward backwardation.

Which is what you would expect of the paper exchange prices a day after this announcement: http://www.zerohedge.com/article/45-scotia-mocattas-registered-silver-transferred-eligible-status

This chart is also another way of saying that these tremors in the paper "price discovery" mechanism, that is the futures exchanges, are just another sign of trouble with the monetary system, and the exchanges themselves. Since the cash market is currently wrestling control away from the futures exchanges, to be the main market for price discovery.

A 39 year bias toward a normality of contango in the monetary metals market since 1972, but with a falling trend in contango since Winipeg opened to gold futures back then, til moving to today, where the bias in the basis is towards the possibility of permanent backwardation due to monetary stresses et al, does not come without it's volatility in the basis. We are seeing that volatility in today's chart. It should not be surprising.

The question, what equilibrium, if any, does the basis sit at next, after this volatility? Does it predominantly go back into backwardation? Or will we see contango again, if ever? Or does it remain in this chaos? All three perhaps?

Dan The Man's picture
holy cow...overlay SLV on to the philly G/S index.  what an eye opener.  philly hasn't budged. mining stocks HAVE to rise...a lot.
MCHedgeHammer's picture

not unless it starts costing less to pay workers to get into the mine.  a la austrialia and canada, wages are spiking for mining workers.  fuck i might quit trading and go do that, maybe i can get paid in silver instead. 

Snidley Whipsnae's picture

Mine = A hole in the ground with a liar standing near by.