What does normal backwardation mean?

Definitions for normal backwardation
nor·mal back·war·da·tion

Here are all the possible meanings and translations of the word normal backwardation.

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  1. Normal backwardation

    Normal backwardation, also sometimes called backwardation, is the market condition wherein the price of a forward or futures contract is trading below the expected spot price at contract maturity. The resulting futures or forward curve would typically be downward sloping, since contracts for further dates would typically trade at even lower prices. The opposite market condition to normal backwardation is known as contango. A backwardation starts when the difference between the forward price and the spot price is less than the cost of carry, or when there can be no delivery arbitrage because the asset is not currently available for purchase. Futures contract price includes compensation for the risk transferred from the asset holder. This makes actual price on expiry to be lower than futures contract price. Backwardation very seldom arises in money commodities like gold or silver. In the early 1980s, there was a one-day backwardation in silver while some metal was physically moved from COMEX to CBOT warehouses. Gold has historically been positive with exception for momentary backwardations since gold futures started trading on the Winnipeg Commodity Exchange in 1972.

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Numerology

  1. Chaldean Numerology

    The numerical value of normal backwardation in Chaldean Numerology is: 7

  2. Pythagorean Numerology

    The numerical value of normal backwardation in Pythagorean Numerology is: 6

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  1. normal backwardation

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    "normal backwardation." Definitions.net. STANDS4 LLC, 2022. Web. 16 Jan. 2022. <https://www.definitions.net/definition/normal+backwardation>.

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