{"id":6574,"date":"2025-01-24T09:41:58","date_gmt":"2025-01-24T09:41:58","guid":{"rendered":"https:\/\/www.alcircle.com\/blog\/?p=6574"},"modified":"2025-01-24T09:42:00","modified_gmt":"2025-01-24T09:42:00","slug":"hedging-with-jorge-episode26-borrowing-in-backwardation","status":"publish","type":"post","link":"https:\/\/www.alcircle.com\/blog\/hedging-with-jorge-episode26-borrowing-in-backwardation","title":{"rendered":"Hedging with Jorge #Episode26: Borrowing in Backwardation"},"content":{"rendered":"\n<p>So, what happens when you borrow in <strong>backwardation<\/strong>? Well, the rule is simple\u2014<strong>you lose money<\/strong>. Why? Because in a backwardation curve, the <strong>nearby price is higher<\/strong> than the future price. That\u2019s just how the market moves!<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"Hedging with Jorge #Episode26: Borrowing in Backwardation\" width=\"696\" height=\"392\" src=\"https:\/\/www.youtube.com\/embed\/w-MqgdFyhzQ?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n\n\n\n<p><\/p>\n\n\n\n<p>Let\u2019s break it down:<\/p>\n\n\n\n<p>If you borrow to postpone a short, say from April to May, April\u2019s price is higher than May\u2019s price\u2014you lose money.<\/p>\n\n\n\n<p>If you borrow to anticipate a long, meaning you buy in March instead of April, March\u2019s price is higher\u2014you lose money.<\/p>\n\n\n\n<p><strong>Final Takeaway: Backwardation vs. Contango<\/strong><\/p>\n\n\n\n<p>Borrowing in <strong>backwardation<\/strong>? You lose money.<\/p>\n\n\n\n<p>Borrowing in <strong>contango<\/strong>? You make money.<\/p>\n\n\n\n<p>So, keep this rule in mind whether you&#8217;re postponing or anticipating!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>So, what happens when you borrow in backwardation? Well, the rule is simple\u2014you lose money. Why? Because in a backwardation curve, the nearby price is higher than the future price. That\u2019s just how the market moves! Let\u2019s break it down: If you borrow to postpone a short, say from April to May, April\u2019s price is [&hellip;]<\/p>\n","protected":false},"author":89,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-6574","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-open-forum-for-aluminum-community-blog"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Borrowing in Backwardation<\/title>\n<meta name=\"description\" content=\"Borrowing in Backwardation: The Rule is Simple \u2013 You Lose Money\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.alcircle.com\/blog\/hedging-with-jorge-episode26-borrowing-in-backwardation\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Borrowing in Backwardation\" \/>\n<meta property=\"og:description\" content=\"Borrowing in Backwardation: The Rule is Simple \u2013 You Lose Money\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.alcircle.com\/blog\/hedging-with-jorge-episode26-borrowing-in-backwardation\" \/>\n<meta property=\"og:site_name\" content=\"AL Circle Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AlCircle\" \/>\n<meta property=\"article:published_time\" content=\"2025-01-24T09:41:58+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-01-24T09:42:00+00:00\" \/>\n<meta name=\"author\" content=\"Jorge Eduardo Dyszel\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@alcircle\" \/>\n<meta name=\"twitter:site\" content=\"@alcircle\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Jorge Eduardo Dyszel\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/hedging-with-jorge-episode26-borrowing-in-backwardation#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/hedging-with-jorge-episode26-borrowing-in-backwardation\"},\"author\":{\"name\":\"Jorge Eduardo Dyszel\",\"@id\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/#\\\/schema\\\/person\\\/64371a8562aa8589375f4f9a8c08a9f6\"},\"headline\":\"Hedging with Jorge #Episode26: Borrowing in Backwardation\",\"datePublished\":\"2025-01-24T09:41:58+00:00\",\"dateModified\":\"2025-01-24T09:42:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/hedging-with-jorge-episode26-borrowing-in-backwardation\"},\"wordCount\":130,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/#organization\"},\"articleSection\":[\"AL Circle\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/hedging-with-jorge-episode26-borrowing-in-backwardation#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/hedging-with-jorge-episode26-borrowing-in-backwardation\",\"url\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/hedging-with-jorge-episode26-borrowing-in-backwardation\",\"name\":\"Borrowing in Backwardation\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/#website\"},\"datePublished\":\"2025-01-24T09:41:58+00:00\",\"dateModified\":\"2025-01-24T09:42:00+00:00\",\"description\":\"Borrowing in Backwardation: The Rule is Simple \u2013 You Lose Money\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/hedging-with-jorge-episode26-borrowing-in-backwardation#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/hedging-with-jorge-episode26-borrowing-in-backwardation\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/hedging-with-jorge-episode26-borrowing-in-backwardation#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Hedging with Jorge #Episode26: Borrowing in Backwardation\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/#website\",\"url\":\"https:\\\/\\\/www.alcircle.com\\\/blog\\\/\",\"name\":\"AL Circle Blog\",\"description\":\"Aluminium Industry Trend &amp; 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