TFMR Podcast #40 - Sandeep Jaitly Discusses Gold Backwardation

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To get more precise information on the subject of backwardation, I figured I'd go straight to the expert.

Sandeep Jaitly has been measuring and studying backwardation in gold and silver for years. To me, he is the foremost expert on the subject so I figured that if there was anyone who could explain the broad ramifications of backwardation to you, it would be Sandeep.

In this podcast, Sandeep discusses:

  • Why backwardation in gold and silver is different from other commodities.
  • How backwardation is measured and his procedure for finding the appropriate data.
  • For how long and to what extreme we are currently seeing backwardation, not only in gold but silver, too.
  • And finally, what precious metal backwardation may signify within the more broad concept of The End of The Great Keynesian Experiment.

Something tells me that you'll find this discussion very interesting and thought-provoking. I look forward to reading your feedback and comments.

TF


92 Comments

Just A Regular Guy's picture

FiRST

FIRST! ZOMG WIN-RAR!

Silver Spurs's picture

Second... maybe

Close enough , wow!

Tabberto's picture

bravo

brahmin

mack's picture

top 5

high 5 all

The Springbok's picture

top ten!

hoorah

dowloading podcast for lunchtime lisetn

thanks turd

marakai's picture

I love this place

So much knowledge, such a nice crew and nearly all on the same page.

and  a newb can make top ten too. :)

Dr Jerome's picture

Dang

I sit here all morning refreshing constantly so I can be first, and I turn my back jor just 10 minutes to actually do some work and be productive, and I miss out!

Gold support at 1600 seems to be holding for now, but I suspect they will press it down in the globex session. But we are in a perfect bullish channel the past few days.

Mammoth's picture

PM's are not Everything!

Last Saturday morning one of my cats died.  Ink – the big, gray & black-striped tabby who I picked up at the animal shelter back in 1998, liked to sit on my lap whenever I sat in front of the computer.  He seemed fine earlier, but after leaving the room for a half-hour I returned to find him just lying on the floor with his eyes & mouth open, not breathing.  It must've been sudden, so I do not think that he suffered since he had showed no signs of any illness.

The past few days have been difficult, and as any of you who have lost a pet knows, there is a big empty hole in our hearts now.  I decided not to 'sugar-coat' things, and my daughter is better off because of her father's adhering to reality. But she talked about Ink nonstop on Saturday, and asked many questions which I tried my best to answer.

I dug the grave in a spot next to the pond, but waited until late afternoon - just before dark - before burying Ink.  I must admit one reason I left him there in his box all day, wrapped inside my daughter's little toddler-blanket, was because I had this hope that he would awaken. But of course that did not happen.  All the Silver in the world will not bring my cat back!  But that's okay, he had a happy life.

Don't forget to hug your loved ones and let them know how much they mean to you!

While we were working in the garden Sunday morning, dear daughter pointed up at the sky and said that a cloud up there looked just like our dear departed cat.

hammerman's picture

great trades by andy last nite...

made a small fortune following andy... and its soooo easy....weeee  kinda like stealin....

<TF edit>

Thank you for the unsolicited endorsement. For those curious, here's a link: http://www.coghlancapital.com/daytrades-application?ak=turd_army

¤'s picture

nice snag

Nice job TF! The archive of podcasts is getting larger and gains valuable depth with each esteemed guest you roll out for us.

¤'s picture

Mammoth

Sorry to hear about your cool looking friend :-(

Hang in there, it'll get easier soon hopefully.

ACAD's picture

@hammerman

I follow Andy. He didn't make any trades last night. What are you referring to?

Swift Boat Vet's picture

Eleven? (or so)

Just think,  I could have been THIRD if I didn't listen to the podcast first.  Very good interview Mr Turd, and very informative.

Your interviewing skills are actually getting quite good.  Thanks again.

Swifty

Dr Jerome's picture

@hammerman

Yeah... what acadotte said!

Last night the markets were very flat. What was there to trade that made so much money? The largest move in silver was about 16 cents.

zinlover's picture

you are so right...

its really, in the end, about relationships...  always good to keep such things front and center!

Pining 4 the Fjords's picture

Wow- Sandeep!

Great explanations, very informative- I am glad that Turd directly addressed some of the recent "critique" (and I use that term loosely) in the PM blogosphere that backwardation "happens all the time in commodities markets".  Sandeep did an excellent job sorting through that one.  Favorite comment of the interview was Sandeep saying that the backwardation structure right now "...seems poised to smack anyone in the face who is short gold or silver in the coming weeks".  Nice!!!

Great content, Turd.  Thank you!

GuerrillaCapitalist's picture

Mammoth with Condolences

When a beloved animal dies, it changes the world of  those who shared thier path with joy and love. I grieve along with you, as I have had many companions die far to early. The last was a magical little dog that used to sleep with her head riding my typing arm.

Your family and Ink are fortunate to have influenced each other with so much love. I know how bittersweet that will always be.

GuerrillaCapitalist

Missiondweller's picture

REALLY GREAT INTERVIEW

Thanks Turd. This was a very informative conversation.

Horst's picture

Thanks. I would appreciate

Thanks. I would appreciate longer interviews. Sandeep barely had time to go into any detail, into the real interesting stuff. I'd appreciate hour-long interviews like the "Full Willie" interview a couple of weeks ago.

GuerrillaCapitalist's picture

Thanks Much, Turd

My dear Mayor Turd:

As a friend mentioned above,  your interviewing skills are top notch. You allow your guest to flesh out an answer, but not to drone off point. You have quite a knack for steering the interview in a very charming and extremely well informed  way.

I often feel as though I'm in a graduate level finance course while hanging out in Turdville. How cool is that...

GC

Basil's picture

C'mon Hammerman - we're waiting ........

How did you make  "a small fortune"  following  Andy Maguire last night ????

The silence is deafening .......

Edward G's picture

Backwardation to the future

Turd really knows his shit!

And is a great interviewer. Respect.

heyJoe's picture

Great Interview

Thanks Turd!  The hits keep coming.

CaribSurfKing's picture

4 year trend line in Silver now acting as resistance

I hope its not time for Silver to plummet!

A few more weeks will let us know!

Pining 4 the Fjords's picture

And another thing...

Post MF Global, lending out your silver and gold in return for some measly interest payments sounds like an astoundingly bad idea.  Might as well strap a live crocodile to a cart with a  small child aboard.  Nobody could possibly be that stupid.  Oh wait...

Crocodile-cart.jpg

P.S.- I love how the person who did this also created a playground slide (in the background) at an impossibly steep angle so that the children would slam into the ground at high speed AND they put a live croc at the bottom.  Good times.

dropout's picture

Forward to Backwardation!

Remember when gold first went into backwardation in 2008? The cries from the rooftops were deafening! There after has been much 'hullabaloo' about this phenomena. So much so, that backwardation discussion has become ho-hum, back page news.

Just as in present market sentiment, the amount of complacency is astounding. Sooner, rather than later, this complacency is going to bite those who are in lah-lah land, in the nether regions! Backwardation in gold and to a lessor extent silver, is an unnatural state.

Sandeep's comparison to interest is remarkable. I like it alot. Attempting to explain backwardation to the uninitiated is difficult and anything to simplify this is very welcomed.

Backwardation is like being paid a higher rate of interest for your gold, rather then your fiat. Which should be the other way around.

TF - Thank you very much for all that you do. The shorts are now facing the 'perfect storm.'     

Bollocks's picture

More discussion on gold backwardation.

Max Keiser talks to renowned mathematician and monetary scientist, Professor Antal Fekete, about the gold basis - cash versus the nearest futures contract and why that the cash price for gold is never reported is by design. They also discuss gold repatriation from Germany as a trial balloon, to see how much demand there is for cash gold and how it is that permanent backwardation means internal bleeding in the monetary system.

12.20 in

Bill of Rights's picture

Some good stuff on steel and

Some good stuff on steel and Capesize shipping in this, but coal imports is my focus:

China PMI Figures Down; Iron Ore Prices Damp, Coal Imports Up | Steel, Aluminum, Copper, Stainless, Rare Earth, Metal Prices, Forecasting | MetalMiner

Chinese coal imports in January, however, were up 54 percent year-on-year increasing to 25.2 million tons, while metallurgical imports totaled 7.1 million tons, an increase of 3.7 million tons or 107.3 percent year-on-year.

For coal imports to be rising so strongly with iron ore remaining flat seems contrarian until one looks a little deeper.

Domestic coal production has been severely restricted as the government seeks to limit small private mines in preference to large state enterprises. There are good reasons for this: China’s safety record is the worst in the world, and only by applying proper corporate safety procedures is Beijing going to turn the situation around. Meanwhile, Australian and Mongolian coal miners are benefiting with rising demand.

Metallurgical imports totaled 7.1 million tons, an increase of 3.7 million tons or 107.3 percent year-on-year. 

 WOW!

CaribSurfKing's picture

Stock market up, metals down

Normal service resumed

Just in time for a new Mike Baloney video series, comapring modern day markets to Egyptian barter!

Well done Mike! Well done!

http://goldsilver.com/hidden-secrets-money/currency-money/

The Doc's picture

Jim Willie is as bullish as

Jim Willie is as bullish as ever in his latest hat trick letter.  lol

WHAT WILL THE FUSE BE THAT TRIGGERS THE FINANCIAL COLLAPSE ??

Some mid-sized seemingly minor bank will fail. It will have linkage to another big bank in a corresponding role. The obligations will not be possible to cover. The contagion will spread to numerous large banks across Europe to London and New York. The derivatives could be involved, very unmanageable. If not a mid-sized bank, then a major bank will fail from the inability to contain the profound insolvency and massive bleeding during capital flight. The Greek zone has been contained, where disaster runs its course. But larger Italy, Spain, and France are rapidly breaking down, each in its own unique important way. A great many fuses lie, each waiting to be lit.

http://www.silverdoctors.com/jim-willie-gritty-questions-on-the-historic-collapse/

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