2012-12-21 — kingworldnews.com
I'm looking at the action on Thursday and what really strikes me is we've discussed the backwardation. Backwardation is clear evidence that both gold and silver futures are oversold. Essentially there are no willing sellers of physical to exchange for a cheaper, further-out-dated futures contract."
Silver at one point at the highs in Shanghai was trading at a $1.75 premium. That means a single contract was trading at an $8,694 premium to a Comex contract. That's ludicrous. That really gives you a much better picture (of what's going on in the physical market).
There are reasons why silver or gold may trade at a premium in Shanghai, but not to those kind of degrees. We're now reaching extremes, the kind of extremes you rarely see.
... any further discounting from here is going to force things to really go badly for the two largest short banks. And they are looking for an optimum exit next year anyway. I would say the capitulation we are seeing right now is a classic bottom.''
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