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If “trust” was a tradable commodity its price would be sky high right now; demand is high and yet supply is extremely low and existing stocks are perishing. Think of the events of the recent past where trust has been lost – the Worldcom/Enron accounting scandals, the interbank market meltdown in 2008, the Fed/BoE/ECB/BOJ experimental monetisation of government debt, the Occupy Wall Street movement, uprisings across the Middle East and the Snowdon revelations evidencing mass international spying.

It follows then that the Pew Research Center’s survey of Americans recently showed that one age group (18 to 33 years-olds) recorded the lowest ever result (19%) for the trust question “would you say that, generally speaking, most people can be trusted?” And according to Dr. Jane Holl Lute, president and CEO of the Council on Cyber security and a former deputy secretary at the department of homeland security, with regards trust “the trend of decay is the near total collapse of public trust in public institutions, and it’s true globally. So what we are seeing fundamentally is the rise of the human being taking matters into their own hands”.

Washington Post: Millennials’ lack of trust part of global trend

As stinging as that statement is, it does establish “trust” is near record low levels; so shouldn’t gold prices be near record highs? Instead gold spot prices, in US dollar terms, are languishing around 30% below their peak in 2011. On the surface that seems incongruous and has many investors puzzled.

A recent article by Steve Ellis looks deeper and establishes that we are witnessing record levels in the gold market (just on another metric). The gold forward curve (the series of tradable prices spanning out at fixed future dates) has become downward sloping (or “backwardated”) for the longest consecutive period in gold’s history. The piece discusses whether this sporadic backwardation is about to give way to permanent backwardation and what that means for financial markets.

Permanent gold backwardation

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