Basis, contango and backwardation

What the futures curve tells you

Professional - Gold & Platinum

In this lesson

Calculate the basis and its annualised rate, and read contango and backwardation.

Key takeaways

Basis = futures price − spot price; annualise it to compare expiries.
Contango (futures above spot) is normal; backwardation (below) signals stress or heavy shorting.
A very high annualised basis shows crowded, leveraged longs.
Watch the basis together with funding rates and open interest.

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Next lesson: Funding and cash-and-carry

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