Backwardation - Safe Haven/ETF Premiums 321gold

"Even in this "new normal", however, it has been only one at a time: one metal, and one month. This is because the backwardation occurs with the "contract roll", as people sell the expiring contract and buy one farther out. The selling pressure on the expiring contract is most intense for a short period of time. After that, the spread widens as the market makers move on, the selling pressure abates, and with wider spreads all around, both the basis and cobasis fall into oblivion. Except for the December month, gold and silver futures are liquid in different months."

source: http://www.safehaven.com/article/25452/backwardation-in-gold-and-silver

Price correction into backwardation is a clear sign of a bottom.

The backwardation didn't last long, as it appears the June contract continues trading, while the May contract is fixed. We are only a limited number of trading days from options expiry in the May contract:

http://finance.yahoo.com/q/fc?s=GCJ12.CMX

ETF Premiums

Premiums over the physical price of silver or gold in ETF prices become very reduced at bottoms, while at tops, premiums can extend as much as 65% briefly at the tops of markets. (as it had occurred in a market corner of gold in 1869, and premiums over physical prices were obtainable of $41.32 vs. $35 by aggressive marketing of gold straight out of mine production during the depression after devaluation, an 18% premium, premiums over coins are obtainable via eBay.)

The amount of premium, or lack of it in precious metals over spot can demonstrate a top or bottom of a market.

http://www.321gold.com/editorials/moriarty/moriarty051612.html

-F6