macrocephalopod

in March and holding till May, vs receiving physical in May. Normally it tracks (the negative of) interest rates, since the only difference between a position in physical vs. forward is that the physical needs to be financed, at roughly the short-term risk free rate.

Today it has blown out, hitting 10% at peak and currently sitting at ~5% which is about ~6% above the theoretical value of -1%. What does that mean? It means the market places a big premium on owning physical silver between Mar and May, rather than a forward with essentially the

same economic exposure. Why is that? My best guess is that physical silver can be delivered into the $SLV ETF in return for shares, and the market is pricing a large premium of $SLV to NAV -- i.e. this does not show that the market thinks a silver price pump will succeed, rather

it shows that the market thinks that the price of $SLV will be pushed up relative to fundamentals, and the futures basis is telling you about the expected profit from depositing physical silver into $SLV and receiving shares (which you then sell, pocketing the premium as profit)

Alternative behavioral explanation is that this is traders rushing in SI Mar futures to try and get ahead of an expected pump, creating a temporary price distortion (this may be more likely since the XAGUSD rate has not increased as much as Mar futures have)