"To date, both metals' spot prices have risen over +150%. Recent spot prices have been so strong that they sent the markets into a state of backwardation earlier this October. Not unlike an inverted yield curve with bonds, backwardation is an occurrence when spot prices exceed futures prices. This interprets that the market believes that a physical metals shortage is in effect. Thus, buyers are willing to pay more now , rather than take the risk of being unable to obtain it in the future."
"Due to a surge of physical buying out of India with the onset of the Diwali holiday, Indian markets were closed and buy orders were routed to an unprepared London Bullion Market Authority, which resulted in spot premiums for silver zooming from the normal equivalent of 25-30 cents to over $5.00 per oz. Although the backwardation did not last long, it was viewed by many analysts as the first sign that the dam is about to burst,"
Gold and silver experienced a bullish run beginning in 2022, but emerging supply-side stresses create investor risk. Investors can mitigate risk by choosing ETFs backed by physical bullion, such as the SPDR Gold Trust (GLD). GLD, founded in 2004, tracks LBMA PM spot prices minus fees and trades on multiple international exchanges. Both metals' spot prices have risen over 150%, and strong spot demand produced backwardation in October, indicating perceived physical shortages. A Diwali-driven surge in Indian buying forced orders to London, pushing silver spot premiums from roughly $0.25–$0.30 to over $5.00 per ounce. Analysts view this as an early sign of physical markets supplanting paper traders.
Read at 24/7 Wall St.
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