{"id":81805,"date":"2025-11-21T23:26:19","date_gmt":"2025-11-21T23:26:19","guid":{"rendered":"https:\/\/www.biblaridion.info\/blog\/?p=81805"},"modified":"2025-11-21T23:26:19","modified_gmt":"2025-11-21T23:26:19","slug":"backwardation","status":"publish","type":"post","link":"https:\/\/www.biblaridion.info\/blog\/backwardation\/","title":{"rendered":"Backwardation"},"content":{"rendered":"

Backwardation<\/h1>\n

More like retardation (lolz).<\/p>\n

Backwardation is a market condition where the current spot price of an asset is higher than its price for future delivery<\/strong>. This is the opposite of contango<\/a>, and it typically signals strong current demand or a temporary supply shortage. In a backwardated market, future contracts trade at a discount to the spot price.\u00a0<\/span><\/span><\/p>\n

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Causes of backwardation<\/div>\n
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    \n
  • High current demand:<\/strong> When current demand is high, the spot price of a commodity is pushed up, creating a premium over future prices.<\/span><\/li>\n
  • Supply constraints:<\/strong> A current shortage of a commodity, due to factors like production issues or transportation problems, can lead to backwardation.<\/span><\/li>\n
  • Seasonal factors:<\/strong> Backwardation can occur with seasonal commodities, such as heating oil in winter, as a result of increased demand.<\/span><\/li>\n
  • Market expectations:<\/strong> Traders may expect the price to fall in the future, or they may be willing to accept a lower price for a future contract to secure a guaranteed price.<\/span>\u00a0<\/span><\/span><\/li>\n<\/ul>\n

     <\/p>\n

    Silver Backwardation, Gold Revaluation and a Sputtering Economy | Interview with Andy Schectman.(41 min)<\/strong><\/p>\n