James Turk pointed out in a recent post on the condition of the silver market - backwardation.
You can see this in plain sight. Compare the table below with gold/oil/uranium where those forward month prices are higher.
http://futures.tradingcharts.com/marketquotes/index.php3?market=SI
| Jan 11 | 27.416 |
| Mar 11 | 27.427 |
| May 11 | 27.451 |
| Jul 11 | 27.465 |
| Sep 11 | 27.476 |
| Dec 11 | 27.488 |
| Jul 12 | 27.539 |
| Dec 12 | 27.574 |
| Jul 13 | 27.629 |
| Dec 13 | 27.666 |
I believe $25-27 will be the bottom for silver. Once silver breaks $30, we will never see silver in the 20's every again when measured in USD's. $50 silver is not a pipe dream in 2011. The backwardation condition is just the groundwork for a blast to upside. With silver in the 20's, there is no reason not to exchange your USD's for silver from a financial standpoint. I understand that $1341 gold is not affordable for everyone to purchase every month.
It should be interesting, from a dealer perspective, if we see $25-27 silver in terms of premiums increases and delivery delays.
A note on gold. If gold breaks $1300 and tests the breakout price of $1265, I bet all of the weak hands who bought $1300+ in Oct-Jan will throw in the towel and sell…meanwhile the strong hands and smart money will be buying those shares/contracts as they foresee $1600 in 2011.
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