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Gold/Mining/Energy : Gold Price Monitor

GDXJ 126.30

+3.6%

Jan 12 4:00 PM EST

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To: Jim Ilchyshn who wrote (4109)	12/10/1997 2:25:00 PM
From: Little Joe	Read Replies (2) of 116854

Jim: I am an old time commodities market trader. I have seen the metals backwardize. I have seen this in silver, copper and although I don't recall ever seeing it in gold I have seen the spread narrrow to as little as ten cents. Backwardization almost always means higher prices. I have also seen it happen in oil. The reason is that there are carrying costs associated with owning commodities e.g. interest, storage fees and insurance. Since the holder of the commodity has to carry these expenses they are factored into the cost. When you have backwardization, it means that the current demand is so great that it overcomes these expenses. In other there is a very powerful demand for the cash product and this cannot continue for long without a rise in prices. I hope this was helpful. Live long and Prosper, Little Joe

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