by Keith Weiner
Acting Man
On Monday, Silver got Scarcer – and Simpler
On 23 July, we said:
“Well, it’s complicated.”
The action on 27 July was not.
[…] Notice the big drop in the basis starting around midnight (London time). It falls from over 7% to under 2%.
To refresh: Basis = Future(bid) – Spot(ask)
For the first two and half hours, the spot price is not moving. So, the only way the basis can drop is if the price of the September silver future is dropping. In other words, selling of futures. But while that was going on, there was enough buying of spot to keep it steady.
“Well, it’s complicated.”
The action on 27 July was not.