Monetary Metals Supply and Demand Report: 7 Sep, 2014

The gold price dropped by $19, and the silver price by $0.26 this week. There was a bit of a rally on Friday, following a bad payroll report. We suppose the logic is that job creation is anemic, therefore the Fed will have to print more, therefore the money supply will increase, therefore gold and [...]

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3 replies
    • Keith Weiner says:


      Very good question.

      GOFO is a continuous 30-day (and they have longer maturities as well) quote. By contrast, futures contracts have discrete expiration dates. As we get close to the expiration date of a particular contract, there is selling pressure on that contract. Those who are long the contract to speculate on the price must sell (they can buy a farther-out contract if they wish to remain long).

      This is the force that drives what I call “temporary backwardation”.

  1. miamonaco says:


    Thanks. The thing that doesn’t make sense to me is that as the price of gold has fallen the past 4 days, all GOFO periods have gone more positive. It would appear from that either gold is no longer in backwardation or the LBMA data on GOFO is wrong. Any thoughts?



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