Silver Backwardation Doubles Overnight

Tyler Durden's picture

Yesterday we correctly predicted that the entire 10% silver correction would be momentarily taken out as the Comex news is properly digested. And so it continues - as silver is once again pennies away from $50 and a fresh new nominal all time high, we take a quick look at the futures curve where as expected the backwardation is confirming the "negative convexity" (yes, yes, we know silver is not a duration security) once the $50 stops are taken out will send silver surging to unseen before levels (which also considering it will be at a new record over $50 is pretty much intuitive). In the meantime, the chart below is the worst nightmare of anyone still holding short silver positions. While the near-far contract backwardation was about $0.75 yesterday, it has since doubled in less than 24 hours. We can't wait to see what surprising nuggets the Comex will bring us today.

And 5 day silver chart:

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BobPaulson's picture

There must also be a bull in new profile name requests from ZH topcalling trolls.


Long-John-Silver's picture

The porch is crowded this morning. LOL

What does it all mean's picture

ZH, be a little fair.  IT DID NOT go back to 49.79.  Prime trading market, with a short bias would make you a lot of money.  Don't buy and hope and definitely don't sell and despair.  TRADE, TRADE, TRADE.

GoinFawr's picture

"...STILL holding short silver positions." (emphasis mine)
Sorry if it's confusing for you. (I know, I know: YOU initiated your short positions at exactly 50 US bitz and bytes, supahstah that you ah.)

Hephasteus's picture

It's a bitch isn't. Need us in the casino making puts and calls and buying shares of etfs. Not buying and sticking in a safe where you 30 megawatt data center can't give you one fucking clue about what to do.

Hephasteus's picture

Ya here's their perspectus.


In order to meet rising demand for the popular iShares Silver ETF (SLV), the trust set up to guide the fund is making plans to offer 50 million more shares to institutions.

In a filing with the SEC dated Wednesday, the ETF’s managers list a proposed maximum aggregate offering price of nearly $2.2 billion. The ETF’s parent is the world’s biggest money manager, BlackRock Inc. (BLK)


I see what's going on here. It's japan fallout. JPM screwed blackrock out of 3 billion and now they have to pay for it with ipo on SLV and somehow jack it and pull of a paycheck.

And the plot thickens.

Yup slv and gld etfs are going to blow up. Just a matter of time.


Re-Discovery's picture

I agree.  I made a call to stay in silver positions today, but we are seeing a bear attack right now.  The pops are better than the drops so far so I have stayed long. 

Seem like  the same concerted attack -- physical, etf, and miners all correlated -- that has occurred several times this past week.  I'm still long and will probably have to go negative 1% quickly to shake my day's position.  Will take profits on strong rally today.

Treeplanter's picture

The miners must be easier to short than the metal.  Amazed to see silver up and miners down a little today.

the mad hatter's picture

According to wikipedia:

A backwardation starts when the difference between the forward price and the spot price is less than the cost of carry, or when there can be no delivery arbitrage because the asset is not currently available for purchase.

Ratscam's picture

cost of carry is somewhere max. around 0.2% for the may contract hence it is probably the 'or' version - physical sold out, uuups! 

Americant Expat's picture

I've been out there all week, I'm finally in from the cold and let me tell you, way too many freaks out there. This is the PM anonymous recovery group right? Hi, my name is Americant and I haven't bought any metal since the dip.

MasterB's picture

Hi Americant. One day at a time ...

goldfish1's picture

his is the PM anonymous recovery group right?

It's the hair of the dog that bit you group.

Americant Expat's picture

Hi MasterB, why do I feel dirty when I write that?

Goldfish, I've been rubbing meself with shiny metal all morning with no luck, still no luck. Now I really feel dirty.

Creed's picture

There must also be a bull in new profile name requests from ZH topcalling trolls.



yeah I noticed too



aerojet's picture

I still say that you silver barons are going to get completely fucked in the end.  All this bullshit about the Yuan going to a gold backing, it sounds like total bs to me.  The dollar will continue to fall for awhile longer and then suddenly it will find its legs and some other currency will be the whipping boy for awhile.  This was all planned out already.

GoinFawr's picture

Agree with that last part. Except that when the Euro (for eg) goes back to being that 'whipping boy' those pesky Euro-peons will increase THEIR demand for the PM's: you see how this works?

You're mired deep in the hegemonial 'everything is priced in USD' paradigm. Haven't you noticed that quite often these days when the DX/Y dead cats off some intermediate 'bottom' the PM's rise in concert with it? Same goes for when the PM's negate a retracement. (Self-promoting eg here)

IE while it is still fairly simple and effective for Bernanke to call up his old comrade Mark Carney and ask him for some help with the USD/CAD ratio, it is getting progressively more difficult to manipulate the inherently valueless FIATs as a whole against real money that has no counterparty liabilities.

I like to call it 'Divesting while the divestment is still good.'

It doesn't happen every time, not yet; gotta keep the mushrooms in the dark while feeding them bullshit, after all.

disabledvet's picture

Actually the collapse of the European Union would put a HUGE bid in the "metal" although amazingly "it's silver"--the poor man's gold.  "Greece paying 25%?"  Or "just default to gold?"  Or is it Silver?  That would be the banks that "lent Greece the 100 billion that is now worthless."  Apparently "they believe in the Zero Hedge" motto quite in "hedge, hedge, hedge, hedge, hedge, hedge, hedge, hedge....  But silver?  doesn't sound very European...

GoinFawr's picture

Actually my statement above wasn't quite complete, I'll round it out:

In the past couple of years when a fiat goes down against its peers investors owning that currency who have a higher standard for their definition of 'money' have been rushing to the PM's to protect themselves from price inflation (or even plain ol' 'inflation'-gotta keep my Mish gold leaf distinctions distinct). When a fiat rises against its peers people flush in that currency have been using their gains as an opportunity to divest will the divesting is still good.

schoolsout's picture

I broke out the stash and played pirate for a bit last night...

MilleniumJane's picture

Hopefully you had a willing wench to go along with it ;)

SME MOFO's picture

actually, ask slewie, usually no ladees about on ze pirate boats, if you know what im sayin

Nate Taggart's picture

Better for a good nights sleep than Ambien.  And it's hard to get to sleep at a decent hour after getting stuck on that damn midnight gardening schedule.

Dr. Richard Head's picture

I keep my junk silver in Crown Royal bags, hide them around the house, and draw pirate maps for me kids.  Argh!!!!

cowdiddly's picture

Good idea, Except my two boys would just be looking for the Whiskey. Little Bastards.

tekhneek's picture

Haha that's fuckin' rich.

Josh Randall's picture

That's Genius - Silver investors aren't only smarter but better people

Temporalist's picture

Just keep your hook away from your sack.

astartes09's picture


Avast Cpt. Bernanke!  Hand over the Treasury and no one will get hurt!

barkster's picture

Aaaaaaaaaarrrrrrrrggggggghhhhhhhhhhhh! What do you mean the Treasury is empty?

WeekendAtBernankes's picture

Ahh, lol!  I needed that.


barkster's picture

He would be prosecuted for counterfeiting FRN's for that today.

depression's picture

Blythe Masters Bitchezzz !!!

barkster's picture

Isn't her royal title 'The Bitchess of Blythe'?

tekhneek's picture

I wonder how Dangertime's awesome short position's doing.

Long-John-Silver's picture

Who do you think is junking all of us? LoL

tekhneek's picture


  1. Great for me and long-john-silver, because we buy the shit anyway dollar cost averaging, pretty sure we both bought the dip this week.
  2. Yeah, it might fall off a cliff. I don't see a $35-$40 being a rough target after the horrible #'s come in. but... what if silver's past $100 by then?
  3. I could care less -- and will continue buying.

You heard this talk yet LJS? Q2 earnings = silver/gold collapse?

Long-John-Silver's picture

They can spew all the propaganda they want about PM's. It's all Bullshit. The US Dollar is headed to the scrap bin of all prior fiat currencies. People are only now just waking up and seeing the coming collapse. Before this is over we will see Silver over $1,000 an ounce before it goes to infinity FDR confetti.

barkster's picture

Funny to consider that the British Pound Sterling was originally a POUND of sterling silver and today it buys .034 OUNCE

aerojet's picture

But so what?  The dollar and everything else were once the same way, too, and someone could live decently on $5000/yr. in the 1960s before Nixon fucked us.  We all know fiat is a colossal crime committed against the non-politically connected, what is your fucking point?

barkster's picture

wasn't dissing the pound specifically, just pointing out how the dollar could fall a lot more. take a breath and untwist your knickers...

Al Gorerhythm's picture

His point is what you just argumentatively stated.

suckerfishzilla's picture

Foreignors were allowed to trade their dollars for Gold.  That privilege was not observed for our citizens however.  It was illegal for US to own Gold.  Nixon made the best policy decision any President could have made at the time by taking US off of the Gold standard.  Are the stinking foreignors better than US?

disabledvet's picture

yeh, but "there all onboard this fiat thing" so "they won't have a clue what hit's them" when the dollar is...."not a pound" either.

narapoiddyslexia's picture

It might get a lot worse for dangertime. The GDP numbers seem to indicate we're entering a slowdown. And quite a bit of silver is a byproduct of copper, zinc, and lead production. They won't increase a byproduct's production if the economy tanks. They'll drop a byproduct like a hot potato if their main sellers go down. Moreover, this is from the latest USGS silver report for January 2011 -


"Peru’s Ministry of Energy and Mines reported that silver production declined by 7%, to 3,390 metric tons (t) in 2010 from 3,640 t in 2009. The overall decline was attributed to a 34% production decline at Sociedad Minera El Brocal S.A.’s (Lima, Peru) El Brocal Mine, a 29% decline at Hochschild Mining Plc’s (Lima) Ares Mine, and a 26% decline at Pan American Silver Corp.’s (Vancouver) Quiruvilca Mine."

Demand, meet supply.