Silver Backwardation Increases By 20% in Past Week

Last week we wrote that backwardation in silver is a result of COMEX default risk (somehow this important article was missed by many readers- we discussed the meaning of gold trading in contango while silver's backwardation continues to worsen).  As of that writing, Silver was trading in backwardation from Sept 2012 on out, with the December 2015 contracts trading at a 0.65 discount to front months. As of 7/27's settlements, silver remains in contango from front months through July 2012.  Silver enters backwardation again in the Sept 2012 contract, but the discount on back months (backwardation) has risen 20% in the past week to 0.781. Daily Settlements for Silver Futures (FINAL)Trade Date: 07/27/2011
Month						Settle	Estimated Volume	Prior Day Open Interest
JLY 11						40.553	50	264
AUG 11						40.553	492	369
SEP 11						40.568	77,111	60,044
DEC 11						40.593	3,871	30,247
JAN 12						40.593	-	135
MAR 12						40.592	685	5,288
MAY 12						40.575	35	1,653
JLY 12						40.560	62	1,762
SEP 12						40.537	21	237
DEC 12						40.478	86	8,169
JAN 13						40.457	-	1
MAR 13						40.412	-	425
MAY 13						40.368	-	-
JLY 13						40.322	100	2,212
DEC 13						40.229	106	6,737
JLY 14						40.112	-	232
DEC 14						40.023	-	1,174
JLY 15						39.877	-	166
DEC 15						39.772	1	448