Wednesday, June 1, 2011

Silver Remains in Backwardation

Its been a while since we examined futures contracts to get a feel on how tight the silver market is.
Silver market tightness seems to have eased slightly, as silver is now in contango from current month June 2011 through March of 2012.  From March 2012 on out however, silver remains in backwardation.  For readers new to the silver market, contango is a normal market condition, where a commodity's contracts typically are more expensive further out into the future, as the holder of the asset must account for storage fees, insurance, etc.  When a market is in backwardation, this means that future contracts are selling at a discount to the current month, and indicates that there is either a distrust of the currency the commodity is priced in, (the US dollar in this case) or else there is a concern that the commodity will not be available when the contract comes due (exchange default concerns).
The Dec 2015 contract is now trading at a $1.05 discount to June 2011.

New York Mercantile Exchange (NYMEX)Metals › SILVER (SI)
MarketContract


LastChange
Time
SI.M11Jun 2011


38.303+0.188
set 14:06
SI.N11Jul 2011


38.305+0.215
set 14:06
SI.Q11Aug 2011


38.317+0.122
set 14:06
SI.U11Sep 2011


38.329+0.239
set 14:06
SI.Z11Dec 2011


38.351+0.191
set 14:06
SI.F12Jan 2012


38.340+0.446
set 14:06
SI.H12Mar 2012


38.315+0.175
set 14:06
SI.K12May 2012


38.281+0.445
set 14:06
SI.N12Jul 2012


38.256+0.061
set 14:06
SI.U12Sep 2012


38.237+0.387
set 14:06
SI.Z12Dec 2012


38.218+0.208
set 14:06
SI.F13Jan 2013


38.187+0.450
set 14:06
SI.H13Mar 2013


38.12+0.45
set 14:06
SI.N13Jul 2013


38.035+0.447
set 14:06
SI.Z13Dec 2013


37.913+0.456
set 14:06
SI.N14Jul 2014


37.720+0.447
set 14:06
SI.Z14Dec 2014


37.588+0.456
set 14:06
SI.N15Jul 2015


37.386+0.451
set 14:06
SI.Z15Dec 2015


37.251