A Picture of Gold Availability

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The October gold future went into backwardation today, July 8.

Below, we show the dates when previous gold contracts went into backwardation. As you can see, it is creeping farther and farther out.

This is a picture of gold availability to the market drying up.

– Apr first backwardated Feb 15, 30 trading days before April 1

– Jun first backwardated Apr 4, 42 trading days before June 1

– Aug first backwardated May 16, 55 trading days before Aug 1

– Oct first backwardated Jul 8, 61 trading days before Oct 1

 

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11 replies
  1. [email protected] says:

    I tend to be empirical, so I looked at the dates you gave. They were near beginning points of small bear market rallies. Your basis theory sounds fine in theory, but the reality is this has happened in a severe bear market. In fact, you said the first time it happened was during the 2008 crash It seems logical that backwardation would show that the only person who buys at these extremes is those who really want it or need it now, not necessarily the end of debt money.

    • Keith Weiner says:

      rkautry: The take-away from my paper on permanent gold backwardation is that gold is not scarce. Therefore if it is possible to make a risk-free profit by selling physical and buying paper–yet no one is doing it–then this is not because no one has gold. It is because the market sees that there is a risk.

      Treat rising gold backwardation as you would rising credit default swap rates.

  2. richarddfisher says:

    In your opinion will the progressive increase in backwardation slowly creep out farther and farther or will it just suddenly go permanent overnight.

  3. Rueffallais says:

    Keith,

    Do you have any ideas on where to find documents written by John Exter (not only the famous pyramid) it seems that I am hitting a wall, thanks a lot

  4. Rueffallais says:

    Not only the pyramid thank you so much all kind of documents . John Exter had made a lecture on may 7th 1962 at Detroit Economic club I have asked for a transcript but the COO told me there is none.
    Difficult to find any documentation concerning Exter for the time being (writings)

    By the way keith thanks again for the report that your are sharing with us. It tends to show that backwardation is speeding up (Sandeep must be on fire)

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