Net Gold Commercial Positions Surge To Multi-Month High Short Exposure

The just released CFTC Commitment of Traders indicates that the big banks increased their net short gold exposure to the highest since early 2010, hitting -292,244, a jump of -24,396, and an increase of -69,361 from two weeks prior. Also, in the week ended April 13, the outright Commercial short positions in Gold hit a 2010 record. Gold traders who observed this spike in commercial shorts, especially when combined with the surprising strong gold price action over the past two weeks, are concerned that the news about Goldman, and its ramifications on Paulson's holdings of GLD, may have leaked over the past 10 days to allow banks to front-run today's hit in the price of Gold. The question of whether or not Paulson's worries will materialize into an actual partial or full-scale liqudation will be an open ended question for some time: today many of the key Paulson positions, primarily in financials and commodities have gotten hit hard, leading many to believe that the market may force his hand.

Comments

[Gloomy]

SEC knew of Stanford scheme since 1997, according to SEC inspector general

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Marcy Gordon, AP Business Writer, On Friday April 16, 2010, 4:42 pm

WASHINGTON (AP) -- The Securities and Exchange Commission knew since 1997 that R. Allen Stanford likely was operating a Ponzi scheme and an agency enforcement official who helped quash investigations of his business later represented the billionaire, according to a new report by the SEC inspector general.

The SEC didn't bring charges against Stanford until February 2009, when it alleged a $7 billion fraud. The SEC inspector general also said in a report released Friday that "institutional influence" in the enforcement division was a factor in the agency's repeated decisions not to conduct a full investigation.

Complex cases like Stanford's that couldn't be quickly resolved were discouraged by enforcement higher-ups, the IG's report said.

The report by Inspector General David Kotz said his office's examination didn't find that the reluctance of the SEC's Fort Worth enforcement attorneys to investigate Stanford was tied to "any improper professional, social or financial relationship on the part of any former or current SEC employee."

The IG's office did find evidence, however, that "institutional influence" within the enforcement division contributed to the repeated decisions not to conduct a thorough investigation of Stanford, the report says. Senior agency officials in the Fort Worth office believed they were being judged on the number of cases they brought, and told their enforcement staff that novel or complex cases -- as opposed to "quick-hit" cases -- were discouraged, the IG's inquiry found.

[ratava]

he should go all in and take delivery

[dlmaniac]

I don't know what he will do but that's my plan. Drive it down lower, da boyz, so that I could load more.

[mrgneiss]

If you think some players could possibly have undue influence in the precious metals markets, here's a petition related to position limits for the CFTC:

http://www.petitiononline.com/goldcftc/petition.html

[Selah]

Wasn't there a CFTC hearing about position limits back in March?

I saw a lot of coverage in the MSM before the hearing, but haven't heard anything about the results. Has anyone seen any reporting about the outcome of that meeting?

[mrgneiss]

There is a public comment period on the recent CFTC precious metals hearings that is open until April 26.  Ted Butler suggests you stick to a narrow issue if writing them:

http://news.silverseek.com/SilverSeek/1270647063.php

[Duffminster]

This conjecture feels like MOPE by the big super concentrated Too Big To Fail Metals Short.  Ask yourself these questions:

What percentage of the entire GLD market does Paulson hold?

Even if he sold that entire position all at once, what percentage of daily gold transactions would that actually be?

Finally, the whole mentality that the BLACK BOX hedge funds that follow micro-price movements around like a dog stock to the back end of another dog, shows that the real players in the market who will benefit from any short term pullbacks are not only the huge TBT fail bullion banks with the biggest derivatives positions, but the long term holders of PHYSICAL GOLD and SILVER that are not stored in the Too Big To Fail Vaults.  

Every pullback will be bought by the real wealth that knows where the dollar and euro and the rest of the debt infested, never to be repaid IOUs are going.

Even if Paulson liquidates all of his GLD, chances are the smart money that knows how to beat the derivatives market through long term buy and hold physical tactics will be waiting for a free hand out.

[False_Profit]

...the paulson spin is a red herring.  if i had paulson's leverage, i would buy twice as much at this price, then when the price went up twice what it fell today, i would sell half again, rinse, and repeat...

there is bona fide support waiting to buy if the au price level drops precipitously.

"fiat" is all hat and no cattle...

[Amish Hacker]

It's very possible that Paulson is adding to his positions here, especially since this is the one possibility that no one seems to be considering. Is it really easier to believe that a trader of Paulson's savvy is going to be blown out of the water by a 2% move in gold?

As far as "support waiting to buy," China would have to be near the top of that list. They would love to buy size at a better price than India got recently from the IMF.

[43 Steelie]

I just bought 20 American Eagles after the close.

That's my vote of support. 

[oddsman]

For those of us who have reason to suspect that GLD may have a bit of a tungsten issue, this looks like an attack on a very large position. Or maybe I'm just seeing things...

To me, the interesting part at this point is the media bias. Whether it's Fox or MSNBC, it seems clear that TV viewers will NOT see or hear about the gold-fraud stories (there are more than one!). This story demonstrates how monolithic the news media has become. They can act like they disagree all they want, but it's still quite obvious they share a few biases...

[AgFan]

+1

[justbuygold]

If the SEC news wasn't front run in a big way then I would be shocked.  Of course despite a bit of showboating toady for political reasons  the SEC and CFTC are nothing short of USELESS !  The only way to stop the corruption that runs rampant in govt........ ( The FED, Bernake, Geithner, Paulson, most Senators, congress, SEC, CFTC, etc etc etc)    , on Wall Street  ( the TBTF banks, JP Morgan, Goldman, Paulsson,  handoffs to municicipal officials  (JP Morgan - Birmigham, etc etc, etc), Corporate America ( Enron, AIG, Freddie, Fannie, etc etc etc,),   heck, even the church ( Pope on down)

.....is for a  flood of biblical proportions  and a few ARKS that can only hold a few good American hard working law abiding citizens

[trav7777]

Yeah...it should be obvious to anyone that members of Congress have been outright bribed by the Squid and its cohorts on WS.  I'm sure they kept the cancelled checks if you know what I mean.

The only thing that will take down the banks is a Hitler figure.  Someone who commands fascist control of the military and has the juice and no dirt.  That's not Bama.  Never was, never would be.  He's too in love with being President to ever try to stake something like this out, and there's enough dirt on him floating around out there, too many connections to Illinois fraud and all the actors around him have gone down.

The SEC is beholden.  Maybe an army of 10,000 lawyers suing on behalf of defrauded pension funds can cause death by 1000 cuts, or there is sovereign weight coming in across the Pond, but I doubt it.

You don't put your CEOs into the Treasury Dept routinely without a LOT of political clout.  That's not going to dissipate overnight.  They have killed investigations by "reaching out" to Senators before.

If GS "loses" this suit, it will be a strategic concession on their part and then they are absolved.  "Mistakes were made," a couple minor heads will roll, and some fines will be paid and then that's the end of it.

The government didn't hand $24T over to these guys if they were seriously considering taking them out; they already had the goods on GS's fraud for over a decade now.  Why pick now to do it?  Why not hit them with it a couple years ago instead of giving the Squid tens of billions?

You don't bail firms like this out with the sweetest of deals and then turn around and drive them into the East River.

[godfader]

"The just released CFTC Commitment of Traders indicates that the big banks..."

So "commercials" = "big banks"?

Oh please.

[strannick]

Interesting how the Goldman info coincided with options expiry week (Jason Hamlin).

Why on earth would folks try to bet on the Comex against Bullion banks with the power to create unlimited naked shorts is bizarre. Grab the physical and -though it may take a few months longer- squeeze their nutz instead