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Silver Bullion Backwardation Suggests Supply Stress

Tyler Durden's picture





 

From GoldCore

Gold and silver are higher against all currencies (except the Canadian dollar) in the wake of the worse than expected trade deficit number ($40.6 billion). Sterling and euro are particularly weak against gold and the US dollar today.

Silver backwardation continues and while spot silver is at $30.09/oz, the March 2011 contract is at $30.07/oz and April at $30.01/oz. Incredibly, the July 2012 contract is trading at $29.93/oz and the December 2013 contract at $29.91/oz.

Backwardation is when the market quotes a lower price for spot delivery or a more nearby delivery date, and a higher price for a distant delivery date in the futures market. It indicates that buyers are concerned about securing supply in the future and are willing to pay a premium for spot delivery. It suggests that silver bullion in volume is difficult to buy and that the physical market is stressed and becoming less liquid.

#666666;">Silver in USD – Long Term

Silver in USD – Long Term

Backwardation starts when the difference between the forward price in the futures market and the spot price for physical delivery is less than the cost of carry, or when there can be no delivery arbitrage. This is generally because the asset is not currently available for purchase or is increasingly illiquid.

It can end in default, failure to make delivery, and in sharply higher prices.

Backwardation rarely happens in the gold and silver bullion markets. Since gold futures first started to be traded in 1972 (on the Winnipeg Commodity Exchange), there have only been momentary backwardations of a few short hours.

The extent of the backwardation in silver is unprecedented. It suggests that retail investment and industrial demand internationally is very robust and the small silver bullion market cannot cater to the level of demand for refined coin and bar product.

This is not surprising considering the massive increase in demand, especially from Asia and China in recent months. In China alone, demand increased a huge four fold in just the last year to 3,500 tonnes.

#666666;">net monthly Chinese silver imports Mitsui GoldCore

Table Courtesy of Mitsui

Investment demand for silver both as a store of value and as a hedge against inflation continues to surprise the bears. Many buyers in Asia have experienced stagflation and hyperinflation.

The demand is also very strong on the industrial side where the increasing range of industrial applications is leading to very significant demand that the silver market does not appear to be able to accommodate at these prices.

Solar energy demand has risen massively from a near zero base and Barclays estimates that this equates to more than 800 tonnes of silver being employed in cells in 2009, which translates to about 8% of silver industrial demand and 4% of global silver supply.

Barclays estimates that silver usage in solar panels could more than double and reach 2,000 tonnes by 2012. This would consume 7% of global silver output.

This is just the solar energy sector. There remains a huge range of industrial applications for silver. While demand from the photography sector has declined, demand from the medical, solar energy, water purification and many other sectors continues to rise significantly.

Importantly, this silver is consumer and because tiny filaments are used, most of this silver will not come back into the silver market. A small amount may, but only at dramatically higher prices.

Those with concentrated short positions in the silver market (as identified in the CFTC investigations), such as JP Morgan, will be very nervous about the extent of this demand. Any effort by them to extricate themselves from these substantial short positions may lead to the squeeze that has been anticipated for months.

This means that silver’s nominal high of $50/oz will likely be seen soon rather than later. As we have been saying since 2003, the long term inflation adjusted high of $130/oz remains a viable long term price target.

NEWS

(Bloomberg) -- Gold Futures in New York Rise, Heading for Third Weekly Advance
Gold for April delivery in New York gained 0.1 percent to $1,364.20 an ounce at 10:05 a.m. Melbourne time, heading for a weekly advance. Bullion for immediate delivery fell 10 cents to $1,363.70 an ounce.

(Bloomberg) -- Gold May Gain on Federal Reserve Policy Outlook, Survey Shows
Gold may advance on speculation the Federal Reserve’s plans to maintain near-zero interest rates will spur investment demand, a survey found.

Twelve of 15 traders, investors and analysts surveyed by Bloomberg, or 80 percent, said the metal will rise next week. One predicted lower prices and two were neutral. Gold for April delivery was up 0.9 percent for this week at $1,361.80 an ounce at 11:15 a.m. yesterday on the Comex in New York.

While a lower jobless rate gives “some grounds for optimism,” unemployment will take “several years” to return to a “more normal level,” Federal Reserve Chairman Ben S. Bernanke said on Feb. 9. The U.S. needs faster employment growth for a sufficient time before policy makers can be assured the economic recovery has taken hold, he said last week. The Fed has kept plans to buy $600 billion of Treasuries through June and hold borrowing costs “exceptionally low.”

“The Federal Reserve will continue its quantitative easing of monetary policy as planned, and there are no signs yet that the Fed could raise interest rates any earlier than assumed,” said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt. “Both are positive news for gold prices.”

As of last week, futures indicated that traders expected the Fed to begin raising rates in a year’s time.

The weekly gold survey that started six years ago has forecast prices accurately in 198 of 349 weeks, or 57 percent of the time.

This week’s survey results: Bullish: 12 Bearish: 1 Neutral: 2

(Bloomberg BusinessWeek) -- Carlos Slim Beats Out Buffett and Gates
Mexican billionaire Carlos Slim topped Bill Gates and Warren Buffett in the money game for the second straight year. The value of Slim's publicly disclosed holdings, in industries ranging from mining to telecommunications, surged about 37 percent, to $70 billion, in 2010, according to data compiled by Bloomberg. The 22 percent jump in Berkshire Hathaway (BRK.A) shares wasn't enough for Buffett to catch up, and Gates's Microsoft (MSFT) stock fell 8.4 percent, hurting his returns even as he spread his investments to other companies.

Slim's best-performing asset last year was holding company Grupo Carso, which almost doubled in value as it prepared for this year's spinoff of its mining operations amid soaring gold and silver prices.

(Commodity Online) -- Marc Faber: Gold, Silver prices to fall [may fall in the short term]
Legendary investor, economist and commodities analyst Marc Faber says that prices of precious metals, especially gold and silver, could fall, but investors need not worry because the dip in the prices of these commodities will be shot term.

In his February outlook on commodities, Faber who is better known as the editor and publisher of the Gloom Boom and Doom report said that commodities have reached the parabola stage.

Warning that investors should prepare for some downside volatility in commodities, Faber said that long term he is still bullish on the metals.

But Faber said that precious metals, especially gold and silver could fall in the short term with the general market.

Gold could fall to the $1,100-1,200 area, Faber said.

For investors this should not cause any alarm because with the fiscal problems of the US and further monetization, the future for gold is still bright, he said.

Faber would use any decline in precious metals to add to his positions.

Faber is concerned about commodities, as they are currently very overbought by almost any measure. He goes on to say that commodities seem to have reached the parabola stage--going straight up, which is usually the very end of the move. Yes, it could last longer than anyone expects, but at some point prices will collapse again, as they did back in 2008.

This cycle, Faber notes, always occurs as higher prices lead to an increase in supply, which eventually overwhelms the market causing prices to fall. The cycle is longer for industrial commodities compared to agricultural prices as it is harder to build a new copper mine than it is for a farmer to plant more soybeans.

This cycle will play out even with the Fed's money printing. Investors should prepare for some downside volatility in commodity prices.

(FT) -- EU plans to lift import curbs on soaring food commodities
Europe has moved to loosen import restrictions on important agricultural commodities in response to tightening domestic markets and skyrocketing prices.

The European Commission’s agriculture committee proposed suspending import duties on feed wheat and barley – as well as allowing additional sugar imports at lower tariffs than usual. The proposals are only in draft form and will need to be voted on at forthcoming committee meetings, which are held twice a month.

The measure is the clearest acknowledgement yet of the tightness in European agricultural markets.

Cairo (AP) -- Investors Shift Money From Gold to Riskier Assets
Greater confidence in the economy is leading investors to move money out of gold and into riskier assets in search of bigger profits.

Gold prices have fallen 4.2 percent since the beginning of the year as more evidence surfaced that the economy is strengthening.

 


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Fri, 02/11/2011 - 11:44 | Link to Comment TraderMark
TraderMark's picture

Two of the Western world's last remaining hawks kicked to the curb this week.  In Europe, Axel Weber was thought to be shoo in to be next ECB chief.  Suddenly he is resigning.  So he is Kevin Warsh of the US.  Hmmm....

 

http://www.fundmymutualfund.com/2011/02/western-banks-pushing-out-hawks....

Fri, 02/11/2011 - 12:49 | Link to Comment jus_lite_reading
jus_lite_reading's picture

The politico shuffling is occuring for a reason, and right before the SHTF...

Fri, 02/11/2011 - 11:47 | Link to Comment CD
CD's picture

Backwardation is when the market quotes a lower price for spot delivery or a more nearby delivery date, and a higher price for a distant delivery date in the futures market. It indicates that buyers are concerned about securing supply in the future and are willing to pay a premium for spot delivery.

Doesn't the first sentence contradict the second? Should be "higher price for spot", no?

Fri, 02/11/2011 - 11:52 | Link to Comment MarkTwainsMustache
MarkTwainsMustache's picture

Correct spot>future price = backwardation, spot<future price = contango

Fri, 02/11/2011 - 11:53 | Link to Comment terryg999
terryg999's picture

That's what I was thinking. 

Fri, 02/11/2011 - 12:06 | Link to Comment AugmentedFourth
AugmentedFourth's picture

Ha ha ha, I see what happened here!

Funny, this quote is actually lifted straight from the very first sentance of the very first result Google returns when you search for "backwardation"; A Wikipedia entry on normal backwardation which is not the same as backwardation in the precious metals context. 

http://en.wikipedia.org/wiki/Normal_backwardation

That's what you get for lifting things straight from Wikipedia without even reading them. Lazy...

Fri, 02/11/2011 - 12:17 | Link to Comment kentfinance
kentfinance's picture

yes. correct. worrying error on their part

Fri, 02/11/2011 - 12:21 | Link to Comment Hephasteus
Hephasteus's picture

Backwardation = Pay a premium to get it right now with some hope in the seller of replacing it at lower price.

Contango = Price in future is much much lower indicating that there's no faith in getting it in the future. Right now price is all that matters. Implies that something has to crash in value to make the market balance it books.

Fri, 02/11/2011 - 12:26 | Link to Comment nontaxpayer
nontaxpayer's picture

sure, this is what happens when you've actually never worked in the markets, but just blog about it lol...;-)

Fri, 02/11/2011 - 15:01 | Link to Comment Hephasteus
Hephasteus's picture

What experience can you gain from the market?

Gold is not a consumable commoditity. It's status and behavior as a backwardation or contango participant shouldn't happen.

Silver is a consumable commodity and it will rip the market to shreds.

Fri, 02/11/2011 - 15:40 | Link to Comment ColonelCooper
ColonelCooper's picture

So rather than assume the writer was trying to get a quick textbook definition pasted in and was in too big a rush to read it, you assume the author doesn't know what they're talking about.  The difference between you and them is that the T.D.s are scrambling to bring you a constant flow of real time shit, while all you have to do is make a smart ass comment here and there.

Fri, 02/11/2011 - 23:46 | Link to Comment Trifecta Man
Trifecta Man's picture

Seems to me that you can not trust this Goldcore as a source for anything, which such a blunder like this.

Fri, 02/11/2011 - 11:48 | Link to Comment Quinvarius
Quinvarius's picture

JPM loves jumping in front of that bus.  LOL.  Worst commodity traders ever.

Fri, 02/11/2011 - 14:18 | Link to Comment tmosley
tmosley's picture

They aren't traders, they are suppliers.  They just have REALLY bad QA/QC.  When they ship a commodity, all that is in the crate when it gets there is a piece of paper that says "silver" on it (ro "cotton", or "rice", or "copper"--whatever the case may be).

Fri, 02/11/2011 - 15:38 | Link to Comment Bigger Dickus
Bigger Dickus's picture

If you really beieve that,.... (you know the rest, buddy)

Fri, 02/11/2011 - 11:50 | Link to Comment bankrupt JPM bu...
bankrupt JPM buy silver's picture

Part 4 out today touches on this....on a greater note, you can buy Blythe dolls on my blog, comes with kitchen sink accessory kits.  Enjoy.

 

www.silvergoldsilver.blogspot.com

Fri, 02/11/2011 - 12:18 | Link to Comment Eternal Student
Eternal Student's picture

+1. I'm delighted that the new video will be out today. I enjoy these, and have been looking forward to this next one.

Regarding the Blythe doll, that's cute. Might I suggest an optional Dominatrix outfix with whips and chains? Along with a set of voodoo pins? For those who want to stick it to Blythe. :)

Fri, 02/11/2011 - 11:52 | Link to Comment Ancona
Ancona's picture

When all of the paper holders try to get their hands on physical......get ready for fireworks.

The only reason for SLV anbd GLD to exist is to bleed off demand for the real stuff. If they can book profits without having to worry about those pesky little bars of gold, so much the better. But when they realize they really don't have any gold to deliver......there will be blood.

Fri, 02/11/2011 - 11:54 | Link to Comment Kaiser Sousa
Kaiser Sousa's picture

until Silver is trading n $50-$100 range on the phony paper exchanges the fake ass spot price is irrelevant...just keep buying with every available debt coupon dollar u possess...

fuck all bankers....

 

 

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Fri, 02/11/2011 - 13:23 | Link to Comment Hugh G Rection
Hugh G Rection's picture

+1

Indeed. Fuck ALL the banksters! Especially the Jekyl Island demonspawn cabal of pontificating swine.  If we stand up together we can assure the FED doesn't celebrate a 100years of oppression. 

Fri, 02/11/2011 - 14:41 | Link to Comment Don Smith
Don Smith's picture

FTW!

Fri, 02/11/2011 - 11:54 | Link to Comment umop episdn
umop episdn's picture

In an age where central banks openly print money and bankster fraud goes unpunished, the smart thing to do is to dump all the bankster paper and hold something useful and recognised as a store of value for thousands of years. Silver has additional advantages as the banksters do not now have very much of it so manipulating the price is harder for them to do, plus it is an incredibly useful metal. Argentum, FTW!

Fri, 02/11/2011 - 11:58 | Link to Comment confimationbias
confimationbias's picture

Max Keiser and King World News links that seem to be new:

 

http://maxkeiser.com/2011/02/11/andrew-maguire-bombshell-information-wit...

 

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/3/30_A...

 

Please comment, as I am not knowledgeable enough....

Fri, 02/11/2011 - 12:16 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

Your first link in new info I believe.

Your second link is from last March.

To see more about Magure testimony go here...

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/3/30_Andrew_Maguire_%26_Adrian_Douglass.html

...and here...

http://fofoa.blogspot.com/2010_03_01_archive.html

Fri, 02/11/2011 - 13:55 | Link to Comment tellsometruth
tellsometruth's picture

only new news from google i could find... obviously not him but ominous

 

http://www.westmeathexaminer.ie/news/roundup/articles/2011/02/09/4003011...

Fri, 02/11/2011 - 16:58 | Link to Comment Hephasteus
Hephasteus's picture

Termintor has a phone book page.

Fri, 02/11/2011 - 11:59 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

"But Faber said that precious metals, especially gold and silver could fall in the short term with the general market."

Sounds like talking one's book or jawboning for the purpose to adding to a position.

Asian and Mid East buying of gold/silver/commodities are soaring and Fabar sees a correction? Does Fabar see a Fed rate hike coming? If not, he should stfu.

Fri, 02/11/2011 - 12:53 | Link to Comment Bay of Pigs
Bay of Pigs's picture

That's what I thought. All commodities are soaring? Not quite Mr Faber. The charts show a correction and are now just turning positive again. Lots of room to run to the upside before we get "overbought".

I think $1500 gold and another 5-6 bucks for silver are very realistic short to mid term.

 

Fri, 02/11/2011 - 13:17 | Link to Comment pacu44
pacu44's picture

That's what I thought. All commodities are soaring?

 

I agree, and in all this soaring, the USD is in the lead while the rest of commodities soar... As long as the USD goes to the moon, I expect at least the metals to follow... Am I wrong?

Throw in the real money aspect and the industrial use of silver... I am scared to think that it is a sure thing... BUT there is nothing holding this rocket to the moon to earth...

Fri, 02/11/2011 - 12:24 | Link to Comment dryam
dryam's picture

I like Faber a lot, but he makes so many predictions on where the markets are going.  The one thing he's consistent on is his overall bearish attitude, but his short term calls aren't worth much.

Fri, 02/11/2011 - 12:35 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

"but his [Faber's] short term calls aren't worth much"

His short term calls could be worth a great deal...to Faber. We might find out which way Faber bet in hindsight...but probably not.

Fri, 02/11/2011 - 12:01 | Link to Comment Blindweb
Blindweb's picture

Is there anything else backwardation can mean?  I like to cover all the angles

Fri, 02/11/2011 - 12:08 | Link to Comment topcallingtroll
topcallingtroll's picture

Yes someone please tell us.

Fri, 02/11/2011 - 12:02 | Link to Comment nevadan
nevadan's picture

"The demand is also very strong on the industrial side where the increasing range of industrial applications is leading to very significant demand that the silver market does not appear to be able to accommodate at these prices."

Anecdotal evidence of this.  Tulving is advertising for deliverable bars.  Just send in your dusty old 1000 oz bars and a check for $750 and they will gladly send you 10 brand new 100 oz bars.  What a deal!  Think I'll keep mine instead.

Fri, 02/11/2011 - 12:06 | Link to Comment topcallingtroll
topcallingtroll's picture

Damn you silver! Ok the troll capitulates. I just bought a box of eagles from golddealer.com. this is a sure sign the top is in, but at least i will have some shiny shit to look at. My kids always liked to play with them. Love of silver must be innate. When i offer my kids the dollar equivalent for their silver they refuse. They will spend green stuff but not their silver and they dont even know gresham's law.

Fri, 02/11/2011 - 16:48 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Good for you buying silver!  Your kids are showing you as well that you made a great decision.

+ $30

Fri, 02/11/2011 - 12:05 | Link to Comment Pure Evil
Pure Evil's picture

Ok, Yahoo Finance finally confirms it, Hosni has left the building. (snark)

Fri, 02/11/2011 - 12:07 | Link to Comment Kaiser Sousa
Kaiser Sousa's picture

so Mubarack steps down and somehow all the worlds debt problems r solved and Gold & Silver r "sold off" cause  - "who needs real money anymore?????"....

what a fucking joke....

fuck bankers.........

Fri, 02/11/2011 - 12:14 | Link to Comment topcallingtroll
topcallingtroll's picture

Remember that silver is really the optimists metal and gold is for the pessimists.

Fri, 02/11/2011 - 12:43 | Link to Comment GoinFawr
GoinFawr's picture

No, because I am optimistic that my pessimism concerning fiat bitz and bytes of paper is justified.

Fri, 02/11/2011 - 15:01 | Link to Comment Hephasteus
Hephasteus's picture

The question isn't if being pessimistic is the right thing to do. The question is if we are being pessimistic ENOUGH.

Fri, 02/11/2011 - 18:22 | Link to Comment Lord Koos
Lord Koos's picture

Hope for the best, prepare for the worst.

Fri, 02/11/2011 - 16:55 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

@ top,

Mr Lennon Hendrix suggested recently that platinum is really the PM for optimists (increased car sales, etc.).

Fri, 02/11/2011 - 12:14 | Link to Comment Bigger Dickus
Bigger Dickus's picture

To all bullion permabulls:

The interim top in gold is in. Stick a fork in it.

Silver is screwed.

Fri, 02/11/2011 - 12:17 | Link to Comment oddjob
oddjob's picture

$CAD says you are wrong again.

Fri, 02/11/2011 - 12:43 | Link to Comment yabyum
yabyum's picture

On that news, Iam going to add some more!

Fri, 02/11/2011 - 13:20 | Link to Comment gwar5
gwar5's picture

To all Fiat Perma-Printers: stop banging your spoons on your high chairs. Get real.

Fri, 02/11/2011 - 18:23 | Link to Comment Lord Koos
Lord Koos's picture

Go contrary to the big dick and you'll be fine.

Fri, 02/11/2011 - 12:17 | Link to Comment Bigger Dickus
Bigger Dickus's picture

Tyler, stop yping silver or there'll be lots of sobbing lemmings on ZH in a few months.

Fri, 02/11/2011 - 12:23 | Link to Comment Kaiser Sousa
Kaiser Sousa's picture

yeah, ive been sobbing every since i started accumulating @ $10 per oz....

another genuis roaming the Hedge i suppose.......

Fri, 02/11/2011 - 12:25 | Link to Comment Richard Head
Richard Head's picture

Let's see you back up your talk with some trade confirms.  No?  I didn't think so.

Fri, 02/11/2011 - 14:26 | Link to Comment Bigger Dickus
Bigger Dickus's picture

Dude, I'm actually long physical and I've been accumulating since I was 8 years old.

The paper market is there to be traded, not accumulated.

Fri, 02/11/2011 - 12:36 | Link to Comment GoinFawr
GoinFawr's picture

Bigger, do you remember last year when you vehemently maintained that 'gold was going to go much much lower rather than reaching new highs'?

I do.

Fri, 02/11/2011 - 14:39 | Link to Comment Bigger Dickus
Bigger Dickus's picture

I'm not Johnny Bravo despite the avatar. And I'm long the yellow metal.

Fri, 02/11/2011 - 12:45 | Link to Comment yabyum
yabyum's picture

Boo fucking hoo, dickus, been buying since 6.00$ a oz. How's that frn treatin' ya?

Fri, 02/11/2011 - 13:43 | Link to Comment topcallingtroll
topcallingtroll's picture

Hey I capitulated.  So you are probably right.  The troll is a great contrary indicator.  Where is your son by the way?

Fri, 02/11/2011 - 12:24 | Link to Comment apberusdisvet
apberusdisvet's picture

@ Confim:  Maguire, a London metals trader, in Feb/10 started the ball rolling when he complained to the CFTC about the JPM manipulation and he could prove it, but was never allowed to testify.  Then came the lawsuits against JPM (now a combined RICO case in NYC) based on Maguire's revelations coincident with CFTC Commissioner Chilton's acknowledgement that all was not Kosher with the silver market.  As the vultures started circling, Keiser started the "buy silver, crash JPMorgan" campaign and then everyone "suddenly" became aware that silver was is short supply, and the naked short positions of JPM represented perhaps 3 X the total supply in the world.

Fri, 02/11/2011 - 13:02 | Link to Comment Bay of Pigs
Bay of Pigs's picture

No doubt. What is common knowledge to most of us here doesn't seem to get through to some very thick skulls and pea sized brains of others.

Dickus, what part of this don't you understand? These are the facts, not speculation.

Fri, 02/11/2011 - 15:29 | Link to Comment JonNadler
JonNadler's picture

Bigger Dickus is not supposed to understand anything, he's supposed to get his lines from me and go out and repeat them faithfully

Fri, 02/11/2011 - 16:57 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Feed him to Blythe then.

Fri, 02/11/2011 - 17:40 | Link to Comment JonNadler
JonNadler's picture

that's too harsh even for Dickey, I will give him some time to straighten up first, of course Blythie would love the prowess suggested by his screen name, although probably just an exaggeration, he he

Fri, 02/11/2011 - 12:51 | Link to Comment Cash_is_Trash
Cash_is_Trash's picture

The investment of the decade awakes.

Fri, 02/11/2011 - 12:56 | Link to Comment Man Bear Pig
Man Bear Pig's picture

"Faber is concerned about commodities, as they are currently very overbought by almost any measure. He goes on to say that commodities seem to have reached the parabola stage--going straight up, which is usually the very end of the move. Yes, it could last longer than anyone expects, but at some point prices will collapse again, as they did back in 2008.

This cycle, Faber notes, always occurs as higher prices lead to an increase in supply, which eventually overwhelms the market causing prices to fall. The cycle is longer for industrial commodities compared to agricultural prices as it is harder to build a new copper mine than it is for a farmer to plant more soybeans."

 

What Faber fails to understand is that gold is not an industrial commodity (silver is debatable however, and I have still not completely figured it out). Gold is money, which has an inverse relationship between price and supply. The paper price of gold will collapse, but the physical price will soar.

Fri, 02/11/2011 - 13:16 | Link to Comment gwar5
gwar5's picture

I don't know what Faber was smoking....

There is huge support for gold btwn $1308 -- $1317 with "massive" physical delivery orders at that level... reported James Turk 2 months ago, KWN. The last dip seemed to confirm that support level. I think that's it.

Physical redemptions (China?) out of GLD are occuring, FOFOA. Suggests de-coupling of paper and physical is well underway.

James Turk just reported KWN 2-10-2011 that backwardation in silver is to 2015! Speculates big banks may require a force majeure and government relief before it is over.

 

Fri, 02/11/2011 - 16:49 | Link to Comment trav7777
trav7777's picture

lol...what happens when higher supply cannot be achieved?

Faber can't be this stupid

Fri, 02/11/2011 - 13:05 | Link to Comment FunkyMonkeyBoy
FunkyMonkeyBoy's picture

As far as i'm concerned there's only one question to ask regarding silver at present:

HAS ANYONE GOT THEIR SILVER KEISER COINS YET?

www.silverkeiser.net

HAS THIS BEEN A HUGE FRAUD?

The whole silver keiser promotion looks like a huge fraud by the way it's panned out. They have over $5m worth of people's cash who pre-ordered the coins that were suppose to be delivered by the end of January this year.

Anyone? I'm suprised there aren't more p***ed off people?

Fri, 02/11/2011 - 13:14 | Link to Comment becky quick and...
becky quick and her beautiful mouth's picture

i heard blythe intercepted them all and is tiling her office floor with them.

Fri, 02/11/2011 - 13:41 | Link to Comment topcallingtroll
topcallingtroll's picture

Hey News flash!  I heard that Blythe intercepted them!

Fri, 02/11/2011 - 13:15 | Link to Comment becky quick and...
becky quick and her beautiful mouth's picture

i heard blythe intercepted them all and is tiling her office floor with them.

Fri, 02/11/2011 - 13:15 | Link to Comment becky quick and...
becky quick and her beautiful mouth's picture

i heard blythe intercepted them all and is tiling her office floor with them.

Fri, 02/11/2011 - 13:16 | Link to Comment becky quick and...
becky quick and her beautiful mouth's picture

i heard blythe intercepted them all and is tiling her office floor with them.

Fri, 02/11/2011 - 13:35 | Link to Comment SilverIsKing
SilverIsKing's picture

I wonder if blythe intercepted them all and is perhaps tiling her office floor with them.

Does anyone know?

Fri, 02/11/2011 - 14:19 | Link to Comment Bastiat
Bastiat's picture

NOTE: Max Keiser has no involvement with the production of the "Silver Keisers" what so ever. Physical delivery of the "Silver Keisers" will commence in mid January and all pre-orders will be delivered no later than the end of January.

One good sign is their "contact us" address is in Canada (rather than say, Nigeria).  Certainly not unusual to have delays in anything silver related but since they have failed to deliver on the schedule promised, they need to communicate, pronto.

Fri, 02/11/2011 - 13:20 | Link to Comment jackpagan
jackpagan's picture

I don’t know about anyone else, but I am so sick of watching the price of silver. I own a nice little stash of rounds and bars…the majority bought at $12.88. While I’ve done well I am just fatigued. Tired or researching, tired of watching…just tired! Get this over with already!!!!!

Fri, 02/11/2011 - 13:28 | Link to Comment A_MacLaren
A_MacLaren's picture

You've heard of wear you out, scare you out?

That is the game being played.

Fri, 02/11/2011 - 13:37 | Link to Comment Bastiat
Bastiat's picture

Exactly.  If you own at 12.88, don't worry.  Fuck 'em. 

Besides what was your return on that silver last year?  70%?  I mean you lose 1/2 that this year and still have a spectacular two year return. 

The grassroots move on physical is going to break the paper game, inevitably.  JPM will pull every stunt, exploit every chance they can. But chill out, we're winning.

Fri, 02/11/2011 - 15:49 | Link to Comment The Disappointed
The Disappointed's picture

+1

I'm in no big hurry for the silver show to end. Gave me a opportunity to pick up some 'junk' this week. The longer the scheme surpresses prices, the more I remove from the market.

Fri, 02/11/2011 - 20:17 | Link to Comment Cathartes Aura
Cathartes Aura's picture

why "watch the price of silver"? it's yours, the fiat has fail baked in - peace of mind, buy the dips, etc.

go plant a garden!

Fri, 02/11/2011 - 13:31 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

I don't make paper plays in PMs but for those that do... how about some out of the money calls on silver/gold for 3 ~ 6 months out? It looks like a no brainer based on the yearly cyclical nature of the rise in gold over the last 10 years; ie, gold slow to move in the first quarter and then taking off. Please advise what I am not seeing here...and, yes I know that there remains the remote outside chance that the Fed will raise rates even if it crashes what remains of the US Economy. I am guessing that there is a 10% chance that the Fed raises rates within the next 6 months...and, this should not be construed as advice to go long PM paper.  

BTW, I have done this already with oil contracts.

Fri, 02/11/2011 - 13:42 | Link to Comment MGA_1
MGA_1's picture

Buy your physical !  Interesting times indeed.  If it gets "crisis like" I wonder if Mr. Govt will have to step in... hmmm... I also wonder if the rumor mongers are correct and this is the Chines forcibly holding the prices low through shorts... hmm...

Fri, 02/11/2011 - 13:58 | Link to Comment 6 String
6 String's picture

Every time there is a bullish article on silver on ZH the spot is has been guranteed to tank.

Every single fucking time. Backwardation apparently doesn't mean shit--other than it's fantastic financial jargon characteristics.

Fri, 02/11/2011 - 14:57 | Link to Comment NotApplicable
NotApplicable's picture

What it means is that Herb Stein's Law of Unsustainability is getting closer to being proven correct once again, as the paper market reaches its inevitable end game. Physical will break free.

I have no doubt however, that JPM will survive unscathed, being fully back-stopped by the Treasury, along with the Fed. Also, there will always be the possibility of silver being locked back up again by the gang d.b.a. The DC Desperadoes.

Fri, 02/11/2011 - 15:02 | Link to Comment Bay of Pigs
Bay of Pigs's picture

Yes, it looks like were on the path to Force Majeure.

Fri, 02/11/2011 - 14:02 | Link to Comment johnQpublic
johnQpublic's picture

werewolves

zombie banks

vampire squids

unrealized industrial uses for silver

 

fuck art...lets kill

Fri, 02/11/2011 - 14:27 | Link to Comment Bigger Dickus
Bigger Dickus's picture

Anyone who believes that JPMorgan is short that much silver without hedging along the way is a fool.

Fri, 02/11/2011 - 14:31 | Link to Comment Bastiat
Bastiat's picture

Didn't quite catch the COMEX close to see if Blythe gets to go into the weekend with a sub-$30 close or not.  If she did get it, it was pennies.  I predict after next week she'll never walk right again.

Fri, 02/11/2011 - 20:24 | Link to Comment Cathartes Aura
Cathartes Aura's picture

29.91 for the weekend silver dip-buyers!

Fri, 02/11/2011 - 14:42 | Link to Comment Bigger Dickus
Bigger Dickus's picture

This nonsense about JP Morgan being so stupid as to be short silver without hedging needs to stop. It's getting ridiculous.

That said, I'm stacking silver on the dips.

Fri, 02/11/2011 - 14:56 | Link to Comment oddjob
oddjob's picture

Weakhanded GreenHorns like you are too chicken shit to purchase physical.

Fri, 02/11/2011 - 15:27 | Link to Comment JonNadler
JonNadler's picture

stacking silver on the dips.? so saying you're buying silver on dips is supposed to legitimize you're ridiculous argument about the Morgue?

Ah i see, I see, you're one of my smarter pupils, I have big plans for you Big. You will be an eve bigger Dickus like me soon

Fri, 02/11/2011 - 15:30 | Link to Comment Bigger Dickus
Bigger Dickus's picture

Hey moron, you clearly don't understand how hedging works.

Trust me, the JP Morgue are not flying without a safety net.

Fri, 02/11/2011 - 17:05 | Link to Comment Bay of Pigs
Bay of Pigs's picture

You clearly don't understand the situation at all, no matter how many times it is explained to you.

JPM "'hedging"?

LMAO. 

Fri, 02/11/2011 - 17:08 | Link to Comment Bigger Dickus
Bigger Dickus's picture

If you believe JPM is watching silver go up without hedging their shorts you need to leave the table before you get hurt.

Fri, 02/11/2011 - 17:23 | Link to Comment JonNadler
JonNadler's picture

we all just uneducated sheeple here Dickey, we rely on great minds like you to help us understand these dificult issues. Just throw  around some convuleted arrogant assertions made up essentially of half-truths and it will sound like you know what you're talking about.

 

Hey it's worked for me for years and am a bigger dickus than you are 

Fri, 02/11/2011 - 17:28 | Link to Comment Bigger Dickus
Bigger Dickus's picture

Thanks Jon. I love Kitco. Is that your daughter in a kinky position?

SILVER TO 25 BY JUNE.

Fri, 02/11/2011 - 17:31 | Link to Comment JonNadler
JonNadler's picture

of course you love Kitco, that's who pays your slary don't forget

Fri, 02/11/2011 - 17:44 | Link to Comment Bigger Dickus
Bigger Dickus's picture

Jon, I want a raise this month. If I don' t get I might go postal on the back office chicks.

Fri, 02/11/2011 - 19:25 | Link to Comment JonNadler
JonNadler's picture

But Big how can we give you a raise when you haven't succeeded in scaring one goldbug away from buying physical gold and silver

Fri, 02/11/2011 - 15:29 | Link to Comment Bigger Dickus
Bigger Dickus's picture

I've just bought a kilo of silver coins from a dumb old lady. She's gonna bring her gold coins tomorrow.

I hope she doesn't die next week or one of her kids shows up, otherwise I'll not have enough time to plunder everything of value.

Fri, 02/11/2011 - 15:46 | Link to Comment Hephasteus
Hephasteus's picture

How you liking insanity? It's kind of fun at first.

If she has a white rabbit tattoo. Ask her if lone star likes blue horseshoe.

Fri, 02/11/2011 - 15:51 | Link to Comment Bigger Dickus
Bigger Dickus's picture

Blue horseshoe loves gullible old ladies who have hot daughters.

 

 

Fri, 02/11/2011 - 17:26 | Link to Comment JonNadler
JonNadler's picture

you're a moron

Fri, 02/11/2011 - 15:52 | Link to Comment Bigger Dickus
Bigger Dickus's picture

Blue horseshoe loves gullible old ladies who have hot daughters.

 

 

Fri, 02/11/2011 - 17:27 | Link to Comment JonNadler
JonNadler's picture

you're a moron

Fri, 02/11/2011 - 17:30 | Link to Comment Bigger Dickus
Bigger Dickus's picture

Whenever she says that while moaning it sounds completely different. Who wouldathunkit?

Fri, 02/11/2011 - 15:52 | Link to Comment Bigger Dickus
Bigger Dickus's picture

Blue horseshoe loves gullible old ladies who have hot daughters.

 

 

Fri, 02/11/2011 - 17:30 | Link to Comment JonNadler
JonNadler's picture

you're a shmuck

Fri, 02/11/2011 - 15:52 | Link to Comment Bigger Dickus
Bigger Dickus's picture

Blue horseshoe loves gullible old ladies who have hot daughters.

 

 

Fri, 02/11/2011 - 17:32 | Link to Comment Bigger Dickus
Fri, 02/11/2011 - 15:40 | Link to Comment European American
European American's picture

If Faber wasn't so carefully concerned about keeping his clients, he might snap out of it. Traditional Doctors know how to keep their patients coming back (business is business). It's the Alternative (those who assist Nature) ones that are willing to let go so the patient can heal by and for themselves.

On the other hand, I like his genuine tenacity and clarity. He means well he's just not quite able to come to grips with those various elements who are really running the show. Who is? If people truly realized the subtle value of gold, they would sell all their toys and get on board.

Fri, 02/11/2011 - 17:16 | Link to Comment Bigger Dickus
Bigger Dickus's picture

There's no silver backwardation. It's all hype. Bullishness is at an extreme level. Silver is overbought. Sell your silver now. So I can buy it under 25 again.

Fri, 02/11/2011 - 17:34 | Link to Comment JonNadler
JonNadler's picture

wait til it goes to 5 again, that's much better Dickey

Fri, 02/11/2011 - 17:45 | Link to Comment Bigger Dickus
Bigger Dickus's picture

that's ridiculous. we aren' seeing 5 again in our lifetimes.

Fri, 02/11/2011 - 20:08 | Link to Comment Buck Johnson
Buck Johnson's picture

The economy strengthened also during the depression before taking another dive also.

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