Pardon me, but ...
it appears you are mixing apples and oranges, and tossed in a zebra while you are at it..
First of all, as a poster explained earlier when proferring the excellent, erudite academic piece elsewhere on this forum penned by a studied pundit, Antal E. Fekete (New Austrian School of Economics) ..... --who opined on the misapplication of the term "backwardation". Said assignation is NOT a positive! It is a negative.
Secondly, Cash market is cash market. The cash market is a PHYSICAL MARKET.
The only market which can experience classic backwardation is the FUTURES MARKET, where the NEARBY FUTURES contract (not the spot month) but a FUTURE MONTH is Higher than the extended into the future contract delivery months, in order of calendaring.
The FUTURES MARKET IS NOT in backwardation. The futures is not a physical market.
The FUTURES MARKET IS a paper market.
Only the cash/physical gold, good delivery bar for immediate exchange using some currency to buy and stand there and receive delivery ON THE SPOT, is at a premium to "PAPER SPOT market price mechanism-- reported on the paper futures exchange."
He said, and I quote:
"...........The more paper gold Bernanke sells, the lower the cost of acquiring physical gold in exchange for paper gold becomes. The price of the nearby futures contract will drop to hitherto unimaginable depths, relative to the cash price, making backwardation worse, not better. Ultimately this will make backwardation irreversible. Welcome to the world of permanent gold backwardation.
Truly hope you understand this is a distinction WITH a difference. |
