kjj: i remember back when those premiums were wacky. i can't remember exactly what ppl eventually concluded about that back then but i being a member of Bill Murphy's Le Metropole Cafe at the time, i think he was ascribing it to the silver backwardation on the Comex at the time. you're right, it was a sign of things to come.
but what are the odds that it will repeat itself?
Well, that's the question now, isn't it?
Might have been a freak event, never to reoccur. Or it might have been the first in a series of clear warning signs that we are losing control of the monster we've created.
If there is ever another big liquidity crunch like 2008-2009, I think that you are right that the paper prices will fall again, but I also think that the premiums will go up to match or exceed the fall in paper. But I don't see a replay of 2008-2009 happening again, at least not while people that remember the last event are still alive and still in positions where they can stop it. So, the next event should be different.
first of all, there IS another big liquidity crunch going on right now and i submit its worse than then b/c we never solved the underlying issues and just swept them under the rug by doubling the national debt by bailing out the criminals. AND the fact that there is no one left to bailout gov'ts like Greece and the rest of the pigs except for a bloated ECB/EFSF.
altho its hard, i try to minimize my reliance on peripheral indicators and instead try to focus on the price. obviously fundamentals are important too and this premium percent helps to sort out the story altho i wouldn't rely on it.