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http://en.wikipedia.org/wiki/Normal_backwardation

http://en.wikipedia.org/wiki/Contango

The contango should not exceed the cost of carry, because producers and consumers can compare the futures contract price against the spot price plus storage, and choose the better one. Arbitrageurs can sell one and buy the other for a theoretically risk-free profit (see rational pricing—futures).

NH and POZ,

The 1999 low was marked by 9% plus yields on gold lending. I do believe that as fact. Currently the yield has moved to .3% monthly or 3.6%. There is a W on the chart and gold may move at any time to the moving averages.

If y'all are in gold still then you need an exit plan, but that is just my opinion. If y'all are banking on a barter system you are simply wrong. Utterly and completely wrong, but wrong none the less.

Ever being the contrarian I will give you the truth. The Federal Reserve is the hero in all of this. They have already staved off a more catastrophic economic decline and will continue to keep the economy on a better footing regardless of what happens.

This 'recovery' is stalling as we see the IMF cut growth forecasts. But a recession here is not the end of the world. Gold will go up and down....but particularly down....


Dave
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