Re: CME raises silver margins again.
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Message: Re: CME raises silver margins again.
The backwardation in silver started on Feb. 3, 2011 when the price of silver was just under $29/oz. On Feb. 11, Reuters called the backwardation "unprecedented". The gap between the front month futures contract and the Dec. 15 contract widened to 73 cents on Feb. 18, 2011. On March 7, the gap widened to 109 cents. The gap then started to narrow as the price increased as you would expect. The gap then bottomed at 40 cents on April 13, 2011.
The unexpected then occurred when the gap started widening even as the silver price rose. On April 28, the gap had widened to 76 cents. On April 29, 2011, the gap has now widened to 89 cents. As far as I am concerned, we have a whole new ballgame in the silver market.
Below are the final settlement silver futures as of Friday 4/29/11.
May 11 ........................... 48.584
June 11 .......................... 48.591
Sept 11 .......................... 48.609
Dec 11 ........................... 48.612
July 12 .......................... 48.486
Dec 12 ........................... 48.386
July 13 .......................... 48.238
Dec 14 ........................... 47.931
July 15 .......................... 47.811
Dec 15 ........................... 47.696
As you can see from the futures pricing above, the gap between the front month futures contract and the Dec 15 contract has widened to 89 cents. The gap has significantly widened from 40 cents on April 13, 2011.
The western mainstream media does not seem to want to touch the silver backwardation with a stick. Reuters had a Feb. 11, 2011 article describing the backwardation as unprecedented. To Barron's credit, Randall Forsyth did mention the silver backwardation in the 5/2/11 Up And Down Wall Street Column. Other than these two articles, there has been radio silence concerning the unprecedented backwardation in silver.
In this latest Barron's article, Silver Speculators Look Out! by Murray Coleman, they talk about selecting other commodities based on attractive signs of backwardation and based on momentum. That is exactly what we have for silver. Some how, silver is suppose to be a sell and these other commodities are a buy. Ridiculous.
The silver bears can hit the mining shares, put out a barrage of negative headlines, put out a barrage of false information; but the backwardation in silver has intensified - big time. Even at these prices, the market is saying that silver demand exceeds supply and that the path of least resistance is up over the next few weeks.
Paul Yusem
The Gold And Silver Analyst
www.thegoldandsilveranalyst.com …
Backwardation has widened again after today's smack-down to 97 cents. JPM is in deep trouble.
Paul
GATA’s Adrian Douglas to CFTC Commissioner Bart Chilton…
Comex silver trading
I would like to bring to your attention the absolutely unprecedented silver trading in the history of the Comex. I have pasted below section from my updates to subscribers that discusses the issues of volume to open interest ratios which are simply inexplicable from ANY perspective of normal futures trading and have never occurred before on this scale.
From April 26, 2011 Commentary
It was only at the end 2010 that for the first time ever in the history of the Comex did trading volume exceed total Open Interest. History was made again yesterday as the total volume traded reached 286,268 contracts on an Open Interest of 152,945! This is also the highest ratio in history. This is equivalent to every single contract being sold 1.9 times on the day. Clearly a lot less contracts were involved so contracts changed hands several times. This is High Frequency Trading; the cartel are buying and selling between themselves and with their algorithms the average trader cannot get in front of them and so the market price is being set by an entirely manufactured order flow designed not to let any long contracts get picked up outside of the trading ring. Even more stunning is the trading in the MAY contract month; first notice day is on Friday when these contracts must be either fully paid for, rolled or sold: the trading volume was 181,239 while the open interest was 41,008; you have got to be kidding me! This is equivalent of all the contracts being bought and sold 4.4 times in the session. More likely it was perhaps only 30% of the open interest involved which would mean those contracts changed hands 15 times in the day…that is just not possible for a contract month only three days from first notice; this is the smoking gun of the cartel manipulation.
From April 27, 2011 Commentary
The data from yesterday's cartel attack show that the Comex silver market has already ceased functioning as a normal futures market. The open interest yesterday was 143,341 while the traded volume was a new record of
311,519 contracts. This is equivalent to every contract changing hands 2.2 times in the day. In the MAY contract itself it was even more ridiculous…the open interest was 26,890 and the traded volume was 170,142!
In other words, equivalent to each contract changing hands 6.3 times in the session. This is simply unthinkable in a contract that hits First Notice three days later. This is High Frequency Trading on steroids!
From April 28, 2011 Commentary
The outrageous trading volumes continue to be seen in silver. In the MAY contract the volume reached 40,243 on an open interest of 10,960 contracts.
Once again the TOTAL volume traded exceeded TOTAL open interest by a ratio of 1.65 (total vol= 233K and total OI=135k).
Best regards
Adrian Douglas
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