Contango vs Backwardation
Without knowing it, Aurum Maximus (https://glintpay.com/special-reports/atlas-pulse-gold-report-december-2019/) has sent me on another rabbit hole. A concept I had glanced over.. but now am ready to deep dive and see if added value can help us see a better weight of evidence. The recent peak when gold hit 1560, we had to pay a hefty premium over spot for the next futures contract… ahh If only I would of known!
Could you also believe gold was selling at a discount during the bear market (backwardation)? As the discount was slowly evaporating.. so were the prices of gold bottoming, refusing to go lower.
Edit: Important note… those are $ premiums or discounts…. So back in Jan 1980… that 26$ contango… percentage wise versus the 635$ spot … is HUGE (4%), compared to today’s 10$ premium over the 1500$ spot (less than 1%)
Thanks to you and Northstar for being way ahead of the curve. 🙂
Hey North! Team effort. No one knows the future.. but we can gather evidence to have more probable estimates for price direction. Anyways.. we always have to keep looking slightly around the corner.. to exit when its the mose probable time to do so.
Nice!
Wish you Happy Holiday!!!
This is a great post. Sir Patrick among with others here you R a great asset to this community. I used to watch since 2008 contango/backwardation but had no means to do it.
Below is an post by Prof Antal Fekete.
http://professorfekete.com/articles/AEFRedAlert.pdf
I may post this on main page also.
Reading your post now Bikoo.. I might be more confused now. I’ll drink another coffee and reread… thanks!