Gold Leaps Into Backwardation
Since late January, the February gold contract has been in backwardation. This means that one could make a profit by simultaneously selling a gold bar and buying a February contract. One would still have one’s gold plus a little extra. I coined the term “temporary backwardation” (http://monetary-metals.com/temporary-backwardation-the-path-forward-from-2008-3/), to describe this curious and very recent phenomenon. In our “new normal”, most gold and silver contracts go into backwardation as they get close to expiry.
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