2013-07-30 — fgmr.com
The answer is that it cannot, or at least not in a market unfettered by government intervention. Gold backwardation is an abnormal condition, but theory and practice are different things. It is extremely rare for gold to be in backwardation, but it does happen when governments intervene in the market process.
...
Amazingly, gold has remained in backwardation against the dollar since my KWN interview. The duration of this backwardation is unprecedented in the 4+ decades that I have been following the gold market. Clearly, something noteworthy is happening, which I believe in turn is signalling that something significant may yet happen.
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