After having rose almost from $38 to $50 an ounce in my previous backwardation article(Previous blog entry: http://gamatraders.blogspot.com/2011/04/silver-futures-now-contango.html ) I still see a threat for future price explosion in prices due persistent backwardation.Events like this definitely have adverse effects on prices, And eventually cause flash smash in prices.
If silver breaks 1980 nominal high with out inflation adjusted then its free bird from there no one knows whats the next price levels.Technically speaking it will take general retracements based on supply demand but I would say SKY IS LIMIT.
Future Chain for Silver:
year 2011 is in con tango with the spot but where as from 2012 to 2015 is in backwardation.
CME group rose 9% margin hike to suppress the price and again on thursday they did 10% hike, But do they want to raise margin in just one metal leaving the rest of the metals market.I think this will a be history going back raising margin in success in week period time frame.At the same we had 20% comex physical delivery to eligible so the margin hike had some concidence with physical delivery.Silver room clearly tellingus that it is running out oxygen and manipulated at max. Anyway time will tell.
