Silver Backwardation NEARLY DOUBLES in Past 2 Weeks!

Silver backwardation is suddenly vaulting while silver consolidates in the upper $30's.
In our July 28th update, silver backwardation in back month contracts had increased to a 0.781 discount on front months.

With Thursday's close, silver remains trading in contango from front months through the July 2012 contract, and enters backwardation with the September 2012 contract.
Backwardation is skyrocketing in from the Sept 2012 contract on out however, with the July 2016 contract trading at a $1.241 discount to front months!

As we have stated previously, we believe that this increase in silver backwardation is a result of COMEX default risk, and not dollar aversion.

The fact that back month backwardation continues to increase while silver has corrected $5 indicates that traders want their silver NOW, they are not comfortable holding a contract that matures further than 12 months out.
We will continue to monitor the situation and update our readers to any significant changes or moves.
For newer readers who would like an explanation of backwardation vs. contango in a market, please see our explanation here:

Daily Settlements for Silver Futures (FINAL)Trade Date: 08/11/2011
Month						Settle	Estimated Volume	Prior Day Open Interest
AUG 11						38.656	248	15
SEP 11						38.669	56,062	43,721
OCT 11						38.687	52	32
DEC 11						38.704	11,948	39,049
JAN 12						38.710	3	142
MAR 12						38.717	751	6,433
MAY 12						38.705	74	2,225
JLY 12						38.686	14	1,952
SEP 12						38.651	18	299
DEC 12						38.584	94	8,356
JAN 13						38.557	-	1
MAR 13						38.495	-	435
MAY 13						38.449	-	35
JLY 13						38.375	5	2,210
DEC 13						38.255	286	6,900
JLY 14						38.027	-	232
DEC 14						37.909	-	1,186
JLY 15						37.677	10	156
DEC 15						37.535	16	488
JLY 16						37.415	-	38
Total							69,581	113,905