Loading ...Gold Cotango vs Backwardation – Prof Antal Fekete 2008
Further to Sir Patrick’s post on the subject.
Permanent Backwardation has not happen yet. Also to watch is GOFO on LBMA.
Prof Antal Fekete has been warning of permanent backwardation in the past 2008.
“December 2, 2008, was a landmark in the saga of the collapsing international
monetary system, yet it did not deserve to be reported in the press: gold went to
backwardation for the first time ever in history. The facts are as follows: on
December 2nd, at the Comex in New York, December gold futures (last delivery:
December 31) were quoted at 1.98% discount to spot, while February gold
futures (last delivery: February 27, 2009) were quoted at 0.14% discount to spot.
(All percentages annualized.) The condition got worse on December 3rd, when
the corresponding figures were 2% and 0.29%. This means that the gold basis
has turned negative, and the condition of backwardation persisted for at least 48
hours. ” ….
“Contango whereby the futures price of gold is quoted at a premium to the spot
price is the normal condition for the gold market, and for a very good reason,
too. “… “For gold, there is no cure. Backwardation in gold is always and
everywhere a monetary phenomenon: it is a reminder of the incurable pathology
of paper money. I”
Bikoo, this is intense stuff… “Contango whereby the futures price of gold is quoted at a premium to the spot
price is the normal condition for the gold market, and for a very good reason,
too. The supply of monetary gold in the world is very large relatively speaking.
Babbling about the ‘scarcity of gold’ reflects the opinion of uninformed or badly
informed people. In terms of the ratio of stocks to flows the supply of gold is far
and away greater than that of any commodity. Silver is second only to gold. It is
this fact that makes the two of them the only monetary metals. The impact on
the gold price of a discovery of an extremely rich gold field, or the coming on
stream of an extremely rich gold mine, is minimal ? in view of the large
existing stocks. Paradoxically, what makes gold valuable is not its scarcity but
its relative abundance, which evokes that superb confidence in the steadiness of
the value of gold that will not be decreased by a banner production year, nor can
it be increased by withdrawing gold coins from circulation. For this reason there
is no better fly-wheel regulator for the value of currency than gold. The same
goes, albeit to a lesser degree, for silver. “
sorry for the big quote.. anybody can weigh in on what I’m suppose to understand? Talk to me like I’m a baby please.
And this quote… “Negative basis (backwardation) means that people controlling the supply of
monetary gold cannot be persuaded to part with it, regardless of the bait. ” If I compare to my chart.. the period of backwardation seems to show this… that a bottom is in because they owners of money gold refuse to sell it?
Here is another monetary writer who writes about gold cobasis and backwardation. His archived posts are linked in below:
http://www.321gold.com/archives/archives_authors.php
Who is the mystery author I should be looking for?