Silver Backwardation Continues to Increase

Silver backwardation refuses to go away.
With open interest remaining near recent lows (112,137), backwardation continues to increase throughout back month contracts in silver.
Front month silver settled Thursday at $42.479, and silver still enters backwardation with the Dec 2012 contracts, which settled at $42.462.  The July 2016 contract has widened to a discount of $1.471, a 3.5% discount to front months.
3.5% is an enormous discount for a back month contract, especially when 4 years of vault storage fees and insurance are added in.
(In contrast, back month gold contracts settled at $2,033 vs. $1854 for front months, a 9.7% premium to account for 4 years of fees and insurance). 
This means that silver's back month contracts are in effect trading at a 13.2% discount compared to gold back months which remain in a strong contango, despite the recent massive rally to $1923.
This is perhaps the clearest evidence yet of the tightening physical supplies in the silver market, and general distrust among traders that ample silver will be available for delivery 4 years from now.
We couldn't agree more.

Daily Settlements for Silver Futures (FINAL)Trade Date: 09/08/2011
Month						Settle	Estimated Volume	Prior Day Open Interest
SEP 11						42.479	264	873
OCT 11						42.491	339	362
NOV 11						42.512	21	15
DEC 11						42.530	34,441	76,866
JAN 12						42.553	42	188
MAR 12						42.558	1,487	7,943
MAY 12						42.564	33	2,498
JLY 12						42.553	11	1,955
SEP 12						42.528	8	538
DEC 12						42.462	1,077	9,042
JAN 13						42.424	-	1
MAR 13						42.352	300	460
MAY 13						42.293	18	40
JLY 13						42.231	20	2,204
DEC 13						42.109	320	7,015
JLY 14						41.858	-	232
DEC 14						41.714	2	1,202
JLY 15						41.448	-	156
DEC 15						41.233	-	536
JLY 16						41.008	10	11
Total							38,393	112,137