This could be the result of arbitrage hedging which we have discussed in the past. Essentially one could buy the futures and sell short PHYS and pocket any premium differential.

Traditionally it had been a sign of a lack of 'exuberance' in the specs over the future price moves.

The premiums tended to expand during speculative public buying AND short squeezes in the unit trusts.

By Jesse

http://jessescrossroadscafe.blogspot.com

Welcome to Jesse's Café Américain - These are personal observations about the economy and the markets. In providing information, we hope this allows you to make your own decisions in an informed manner, even if it is from learning by our mistakes, which are many.

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