Investors in commodities funds that hold futures contracts will hear or read the words contango and backwardation. The terms are apt to confuse even those with some Wall Street experience, but understanding them is vital for investors in commodities. Consider palladium, a precious metal used to make catalytic converters: When you buy a futures contract for palladium, effectively you are agreeing to purchase the metal at a certain price for delivery at a specified date in the future.

Source: Wall Street Journal September 08, 2020 00:33 UTC