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Paper Short Gold Positions Hit Fresh Record, As EUR Reshorting Persists In Early Part Of Week
This week's CFTC report indicates that commercial shorts on the CFTC,
both gross and net (excluding commercial longs) have hit another fresh
all time record, at -482k and -290k. Should the ongoing asset
liquidation squeeze forcing gold prices to decline, fizzle out, and
should gold prices resume their trajectory higher, the only question
will be at what point will this barrage of paper shorts get the marching
(and margin) orders to cover.
And in related liquidation news, the CFTC COT indicated that the short covering rampage in the EUR seen three weeks ago has not returned. Net shorts once again increased in the week ended June 29 by 2696 to -73,670. This was to be expected after the biggest short covering episode in the history of the the EUR shook out all weak hands. Yet the real action in the last week started on June 30, which data was not captured in today's release. Assuming there was a fund liquidation as we suspect (and which is also impairing the price of gold and other commodities), we expect the net short number out of next week's CFTC to once contract.
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I thinks thats 482k gross and -290k nett
Jay?
2 words: Position Limits?
A very alien concept in these United States.
Never will happened as the CFTC is in bed with the private mamber owned Federal Reserve central bank and international (FIAT) Money Masters. Gold is the anti-paper currency fraud.
Hulbert short-term bullish:
http://www.marketwatch.com/story/contrarian-reaction-to-golds-big-plunge-2010-07-02?reflink=MW_news_stmp
"Gold's huge drop on Thursday is not the beginning of a new major leg down for the yellow metal.
That at least is the conclusion reached by a contrarian analysis of gold market sentiment. There does not currently exist the kind of stubborn optimism among gold timers that is the hallmark of major market tops."
Hulbert is a joke, if you follow his "contrarian" analysis he rarely gets it right
well said...
Get out of gold guys,
why do you think Gordon brown sell all gold in 1999 after global derivative ponzi that started after death of Glass stegall, is he insane?
He knew that banks will get infinite paper money from the Fed to short gold, silver what not
CFTC could have atleast stopped naked short selling/shorting futures in these metals but they won't
Until that day, Gold is a slot machine
As more and more fiat money enters the market to short gold, silver and prop the stock markets and the banks, inflation will accelerate and will render the price higher no matter how many short contracts will be out there.
Once it gets out of control, gold and silver will rocket to he moon.
You can argue that the government may ban owning gold or trading in gold exept central banks and whatever else suits them. Thus, slowing the stampede.
However, those with physical have gray or black market to protect themselves. Canada having the Maple as currency will most likely allow trading.
On that, you can also argue that Canada, being rich in commodities, may be invaded by the US. Quite possible. It will actually take two days to do that.
Pick your poisons kids!
Mine is Maples.
Hulbert's a shill......and not even a good one.
timber only up because of short covering.
This could get fun. Real fun.
when everyone and his dog is short EUR, it's quite obvious that some fast 400-500 points counter move will wipe out many folks. Shit happens
May the shorts win and gold drop as much as possible... so I can pile in and buy as much as I can. Buying gold at 1200 is nice, but 1100 is much better and under a thousand will be ecstasy.
Not touching 1,000 again. Too many buyers that will come in way before then from individuals all the way up to central banks.
I don't know about that. If the big longs pull out, and they may have just started, well...
Check this out... #36
I hope anyone with positions in gold, whether it be physical or paper, is prepared for what may ensue, should these thoughts be correct.
Don't be weak hands with your physical, you may live to regret it.
even if it goes to 1000, the question will be how much will the premium be to buy physical
Yes, at the height of the Banking meltdown, there was a complete decoupling between spot price of gold/silver and physical via the premiums, which shot up to record levels, at least at the dealer I buy from. While at this time it was still possible to buy, choices were limited.
What will the premium be at 500? 100? 0?
Junked by the weak hands. LOL
my god another one.......they're like roaches, if you see one............
I don't know about that...I am long gold, but have no position at this time other than a few 'pieces.' I think 1000 is very touchable. The guys that RUN the exchanges are still the ones loaded to the hilt on shorts.
It doesn't have to make sense. We know they are manipulating the markets and spot prices. There are 10 articles a day on the web with details about it. So, if you agree that the exchanges are manipulated, how you can you say the JP Morgans and Goldman Sachs won't build up hundreds of thousands of short contracts and just absolutely tank the spot price themselves.
There is REAL demand for gold, but other than a few token retail investors who will buy regardless, the commercials and sovereigns will not catch a knife. Gold is NOT trading like a currency....yet. A 1,000...even 900...all are on the table when the table is tilted.
Holders of physical act as a dampening agent to steep declines, simply because it's more problematic in this country to unload.
There are no "weak hands" holding physical. Personally, I'll be holding my gold until my very life depends on exchanging it for something else.
Same here. I hope to buy more and never sell my Gold unless absolutely necessary. Then near the end of my life (or maybe sooner) I will quietly give it away. Same re my guns & ammo.
Gold, guns & ammo are not affected by EMPs either.
The Power of Giving!
"....I'll be holding my gold until my very life depends on exchanging it for something else. "
Lead?
+950
There will be no margin call as the biggest CRIMEX Gold shorts are backstopped by the printing press. The only possible "margin call" for the shorts is a shortage of the physical metal.
Hey Gordy. Looks like we were thinking the same thing at the same time. Scary. Different paths to the mountain top but yeah.
The situation of supply overwhelming demand has been in play for a lengthy period already. And the backwardation event in gold that Fekete had predicted never came about. At least not yet.
A decline in the discount rate at the same time as a rise in leasing rates will probably set off a relentless rise in the gold bull market.
One thing that is fixed to the price of gold are the face value of bullion leases, so there would have to be exceptional circumstances for the face value of bullion leases to drop while bullion prices rise. I imagine that there would be some consternation if it was found out that central banks, engaged in buying their own bonds out of the market were also engaged in leasing their own gold back to themselves with dubious sources of liquidity in order that bullion lease rates remain lower than the discount rate.
There would have to be much reduced leasing of bullion for an extended period. Normally, when lease rates rise, this means the face value of leases are declining on a gold price fix that is declining.
There would have to be a significant level of the kind of aggregate demand that applies to the bond market to divert into bullion, and I think it will increase with the kind of sell-offs that we saw in the last week, especially if physical gold is sold directly into the market. You know, they say that a year's supply of bullion is traded every four days, so I suppose that this could reduce the stretch of time a year's supply of bullion is turned over. That would be something to watch for.
Fekete's writhings: http://www.safehaven.com/author/8/antal-e-fekete
I think you meant "gold demand is overwhelming supply" and not vice versa? The reason this market imbalance hasn't sent the gold price into the stratosphere is that the vast majority of would-be "gold" buyers have been duped into accepting little pieces of magic gold paper in lieu of the physical metal.
Um, oops. Got up early.
Yes, the demand is overwhelming supply, most definitely. No, I don't think of the etfs as a trojan horse of any sort, and that they will not impede the price of gold.
There are etfs all over the world for bullion, it would be childish to assume they all play the same agenda.
http://www.reuters.com/article/idUSTRE65S13020100629
I think the london price fix pretty much determines the face value of leases, which are part of the dynamic of the gold market. All of the vending of the public trust into the market has NOT resulted in a reduced gold price, merely having it lag inflation.
In fact, Gordon Brown selling off the UK's gold actually kicked off the gold bull market. Any public sales of bullion will literally increase the liquidity of the market; only so much more gets turned over every few days.
I hope you will help me understand something. Lets say that I go to etrade, and short GLD by $1,200. Does that have the exact same effect on spot gold price as Freeport McMoran mining one ounce of gold out of the ground? I mean, if a person who has no gold mine shorts GLD, is he in effect "producing" the equivalent effect of real equipment/people/infrastructure bringing forth an ounce of gold?
If this is true from a practical sense, what is even the argument for GLD by the proponents?
Well, you know if supply and demand worked in the same way for the sovereign bond markets, then we would be seeing much higher interest rates.
The more you expand the bond market, the greater the demand for sovereigns. The gold market acts in the same way, but you add the physical to the market, like adding bonds to the market, it expands the liquidity.
Denis Gartmann saying that the risk of central bank sales bringing the gold price down around our heads with overwhelming supply is pure nonsense. Sure, it would divert the price downwards some, and this happened in 2008 when U.S. coin-melt bars from Fort Knox wound up in Dubai, but by now, the price is much higher.
I think you can see why gold will outperform all commodities, including silver.
No.
If you short GLD you have shorted the shares of the trust which issues GLD shares. It neither creates nor destroys demand or supply for physical gold, ie the Freeport-McMoran side of the equation.
The reason is that shares of GLD are created when a recognized entity (broker dealer, etc acceptable to trustee of GLD, or producer like Freeport) deposits physical gold or receipts claiming ownership of such (Yes, I know, but let's not go there right now. A different conversation for a different time, separate from this question.) with the trustee in exchange for shares which are then held or sold on the open market. It is the creation of such shares via exchange for the gold deposit wherein the physical demand for gold is effected. In essence, the float of GLD shares is an indica or surrogate for a portion of the demand curve for physical gold. (Oversimplified, but sufficient.)
Your short GLD position however, represents ownership of trust shares which you have expected to fall, and in theory, should have a significantly high beta (correlation) to the cash price of the physical commodity, gold. So, it represents a directional bet upon the price of gold via a derivative in the form of the trust, not an immediate change in the demand for the physical commodity.
+1 Thats why Ive always believed that Silver will be the one to pop the cork..Gold will come out of fort knox to help inventory levels in emergency situations in the interest of the fed's where as Physical Silver cannot be produced,even in an emergency...If this were to happen in Silver however, the torch will be lit and the games can begin..
Fort Knox? You think they have gold in there?
Certainly, it makes an excellent tungsten plating.
Tungsten has desirable properties! And tungsten carbide is both very hard and very shiny when polished up. Puts soft gold and tarnishable silver to shame any day.
I think it depends on which group wakes up first. Gold seems to need big buyers and willing sellers so much so that even without big sellers the price doesn't go up (think IMF refusing to sell to entities not on their list) while many large deals aren't even made public until much later. So big money needs to work this one out.
Silver, on the other hand, is more of a common person's trade. Big purchases don't even make headlines.
It will be interesting to see which group sees through the corruption first to bring their market to that tipping point, squeezing the liquidity out of their enemies.
Who will win the race, the gold bugs or silver bullets? At least we're all cheering each other on, no matter size of our starting pockets.
Which COMEX scam collapses first? Silver. Leasing stopped years ago, they ran out. Try to get 100 million ounces...anywhere. Doesn't exist. Now try to get 100 million ounces of Gold. IMF, China, USA, etc. all have it.
1000 ounce bars of silver are scarce on-line. They were plentiful as recently as December. Now the few sites that claim to have them force a 6-8 week waiting period. The bastards at CRIMEX should be terrified. Silver is one strong run away from a price explosion that will make history.
Buy silver. Take possession and wait.
"Silver is one strong run away from a price explosion that will make history."
Oooh Kayyyy! (as in yahoo, yehaww, huzzah - not Ooooh Kay wiseguy!)
That is what I would hope would happen (but not before I add to my silver position).
But, lets pretend that this does happen - what should I do then? Should I hold on to it because it would be worth more as a barter commodity, or sell it for FRNs, and then invest - in what? Would the "Price Explosion" be due to the demand for the metal rising beyond supply abilities, or due to rampant inflation?
I guess the "best" scenario would be for the demand to exceed supply in a hyper-deflationary economy. Then I would simply add to my current acreage!
I am really interested in your input here folks. I know some of us buy PM's for "hedging against what lies in the future", but have we really thought out how to best utilize the PMs in different scenarios? I haven't given it a whole lot of thought - what says you?
GG - I think the dynamic is well understood, but if I may be so bold, the player(s) on the other side are the currencies and therefore the State(s) of the Planet.
This is a matter of national in-security and they have many more tricks up their sleeves (war, false flags, rolling power black outs, etc) to play with.
They do have a mandate and that is preservation of the Corporate State before all else.
Yes, but at some point they will run out of ammunition and get overrun. Collapse of empires and nation states has been pretty common throughout human history. At some point they'll just have to "let it burn".
the only question will be at what point will this barrage of paper shorts get the marching (and margin) orders to cover.
We all know where this is going, don't we? COMEX declares FM, paper settlement only, physical decouples from paper, and either the dollar explodes 5 minutes later, or Iran does.
Sweet and succinct! PS What is FM?
force majeure http://en.wikipedia.org/wiki/Force_majeure
Also known as the truth.
"During times of universal deceit, telling the truth becomes a revolutionary act." George Orwell
But for force majeure simply replace revolutionary with extraordinary.
I think that the State, let's call it the Roman Empire (for laugh purposes only, of course), is well versed in the cycles of "business." The renaissance, build, mature, corrupt, decay, and Mongol hordes, period might be a comedic perspective rather than the staunch seasons of the K methodology. As we have seen the Roman Empire "died," to be replaced by the Holy Roman Empire (Germany), to be mouthpieced around the globe by the Roman Catholic Church.
So in reality the Who's "New boss, same as the the Old Boss" is directly on target.
Of course the dissonance periods (1390-) and others in various regions allow the public consciousness to "forget" that it is still the same folks holding "Court."
La?
I think you know this stuff forwards and back, but it is nice to have this discussion on ZH anyway.
"The only possible "margin call" for the shorts is a shortage of the physical metal."
thats true - but isnt what is happening?
I was reading with the CRIMEX silver inventories at about 115 million ounces and the weekly rate of purchases/removals/shell games that there will only be about 7 months until there is a supply shortage. I forgot where I read that though.
Sweet! I found the article. Interesting read.
http://news.coinupdate.com/possible-run-on-comex-silver-inventories-may-already-be-underway-0337/
There's been a silver supply shortage for at least the last 10 years. I wouldn't hold my breath.
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The cmegroup publishes open interest stats daily. Looking at futures only, gold open int dropped about 15k contracts during the selloff, not much. It looks like the commercial short position is still intact and quite large.
Friday's report http://www.cmegroup.com/daily_bulletin/Section62_Metals_Futures_Products_2010127.pdf
http://www.cmegroup.com/tools-information/build-a-report.html?report=dailybulletin
Perhaps more tied to ECB events on Monday (NYSE Holiday Windup) than cover before next week end. Gold ETF volatility an opportunity, but unwelcome disruption in price mechanics since JAN 2010.
Mark Beck
I bet if you went to Ft. Knox, you would find very little gold.
Instead, there would be pallets of "Short Gold At Market" COMEX order tickets.
Of course, these slips of paper can be printed into infinity.
Ergo, the ability of the COMEX goons to short paper gold is virtually limitless.
Therefore, a downside correction in gold could be quite severe, exacerbated by "deleveraging" of various momentum funds who piled into gold and Treasuries as a "safe haven" the last few weeks.
Only to find that gold is by far the riskiest, highest beta asset to own.
Poor Bill Murphy and Eric King must be pulling their hair out.
If only gold coins had the same physical demand as:
- iPhones and iPads
- Lululemon outfits
- Coach handbags
- Green Mountain coffee machines
Then there would be no problem for gold.
LOL....
if i had some unallocated cash (rather large) i would buy the mining rights in Tora Bora...people seems to forget, but there was a 1 trillion doelars discovery there...
Ergo, the ability of the COMEX goons to short paper gold is virtually limitless.
No, that is limited by the fact that shorting makes physical gold cheaper to buy, thus increasing demand. Of course, this can be vitiated to some extent by the great increase in premiums due to dealers running out of coins and bars, but all that does is point out the disconnect between physical and paper, as the physical price doesn't drop nearly as far as the paper price.
Eventually, if they keep up the manipulation, the paper price will be completely disconnected from the physical price.
No matter what we make think, the powers that be, from around the globe, are scrambling to cover their "shorts". Gold will be the ultimate currency of choice, and I think the U. S. Government may have squandered ours. In spite of their apparent plight, I think many european countries are in much better shape than we, relatively, and will recover much faster. We have nothing to export, except food. Jim Rogers said many years ago, that his children, today, would be headed for Ag school because that's where America's future lies. But that is a long way off.
In his latest interview with Eric King of King World News, Omnis Inc. Senior Managing Director James G. Rickards remarks that while he has never witnessed central bank manipulation of the gold market, he thinks central banks do manipulate it, even as they may call their manipulation "policy," and he notes that, perhaps because of this "policy," the financial regulation bill proceeding through Congress would knock banks out of certain commodity trading but not out of trading gold and silver.
Rickards calls the legislation almost useless and notes that while debate on the legislation began with complaints that the biggest banks had gotten "too big to fail," those banks are now even bigger.
He sees both deflation and inflation in various sectors of the economy and expects deflation to prevail.
Perhaps most interesting, Rickards and King discuss the presentation Rickards made in March 2009 to the Unrestricted Warefare Symposium held by the Applied Physics Laboratory at Johns Hopkins University in Laurel, Maryland.
Addressing the threat of economic and financial attacks on the United States, Rickards described a scenario in which Russia requires its exports of oil and natural gas to be purchased with a gold-backed currency of its own creation. This, Rickards wrote, would constitute a "Pearl Harbor" attack on the U.S. dollar that might drive its value down 50 percent almost overnight and drive gold up toward $4,000 per ounce, causing gold to replace the dollar as the world reserve currency.
"If China joins Russia in this plan," Rickards wrote, "its success is assured."
Of course the Russian and Chinese central banks lately have been buying a lot of gold, and for some reason China hid some pretty massive purchases for a long time.
Rickards also writes that the United States might pre-empt such a Russian and Chinese scheme by restoring gold backing to the dollar -- also at a price of $4,000 per ounce.
While Rickards' scenario is frankly speculation, it seems a bit more authoritative than the recent dismissive comment of Kitco senior market analyst Jon Nadler that central banks have no interest in manipulating the gold price and the similarly dismissive comment of CPM Group executive Jeffrey M. Christian that central bankers hardly ever think about gold.
Of course central bankers do think about gold -- a lot. The minutes of the Federal Reserve's Federal Open Market Committee, though heavily edited, show persistent concerns about gold and even discussions about controlling the gold price. The Fed has all sorts of records involving gold that it is refusing to make available to GATA in response to GATA's freedom-of-information lawsuit against the Fed in U.S. District Court for the District of Columbia. If gold was nothing to central bankers and nothing special was going on with it, these records would be quickly released.
And of course GATA long has noted that the central banks of even some smaller countries, like South Korea, could accomplish a result similar to the one in Rickards' hypothetical Russian scheme just by selling enough U.S. Treasury bonds and buying enough gold. Five years ago mere speculation about little South Korea's diversification of its foreign exchange reserves almost crashed the dollar:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aWcrfg7PMTtQ&refe...
In his inteview with King World News, Rickards argues that the instability of the dollar is by far the greatest threat to U.S. national security. He notes that gold and silver remain money. Indeed, GATA maintains that their continuing centrality as money is the secret knowledge of the financial universe. Now Rickards too is busting the secret. We're grateful to him. The truth will come out. It won't stay a secret much longer.
... Truth forever on the scaffold, Wrong forever on the throne --
... Yet that scaffold sways the future, and, behind the dim unknown,
... Standeth God within the shadow, keeping watch upon His own.
Rickards' interview with King World News can be heard here:
http://www.kingworldnews.com/kingworldnews/Bro
adcas
t/Entries/2010/7/1_Jim_Rickards.html
Rickards' presentation to the 2009 Unrestricted Warfare Symposium can be found here:
http://www.jhuapl.edu/urw_symposium/proceeding
s/2009/Authors/Rickards.pdf
FOFA's view, if you have not read it already.............
http://fofoa.blogspot.com/
WTF are you gold bugs doing? We are in DEFLATION. In 2008, gold got taken into the suck hole. Equity markets are about to fall off a cliff idiots. And that will force liquidations. Gold will get sucked down int he liquidity vacuum. And don't retort with a bullshit QE2 rhetoric. That will come AFTER gold gets taken down. Stop talking up gold when it is about to be slammed.
Gold is not a commodity and does not deflate son. Oh, the paper market might. But the real thing won't.
Yawn...........!
uh oh if the big boys decide gold is just a commodity, not a new currency then bang goes that new paradigm. Which makes it ponzi bubble pop time for gold when the deflation hits. Greedy gold bugs would be well advised to bail while they still have a big profit.
Laughable. Go right ahead, take the phony paper down I could care less. The metal will still hold it's value and nothing will affect that.
Oh...I'm so scared. I'll not be taking your advice (if that's what you call it)!
If the small boys decide it is a currency then the big boys become small boys.
http://www.youtube.com/watch?v=1pKXMcfx1d8
If you sell to a GLD buyer, you have reduced GLD demand. If the buyer will take GLD or physical gold, then you have reduced demand for physical gold. So my answer is yes.
Because gold is in a more-or-less consistently rising trend, these commercials lose a little on each contract, though bear in mind they are naked shorts and they need not actually HAVE the goods. Any gold, should some be needed, is available on loan, courtesy of complicit central banks...
If they wish to keep suppressing a rising price, they must therefore have to keep expanding the number of open short contracts in play.
As time goes by, expect this short open interest to show a continuous steady rise. Anything else and we gold holders SHOULD be concerned...
Does anyone know where I can find (for free) the most current data on Central Banks' gold holdings? Tyler published the data as of Dec. 2009 a while back, but haven't seen anything more recent.
Most recent update here. Also follow linkbacks to recent WGC data.
Thank you.
This is certain! 100% possession is the law among the lawless! Whatever you have of a monetary store of value, physically in your possession; you may be certain lawless vermin from top to bottom in our society will want it!! Perhaps so many you'll need throw it to the thronging hoards merely to escape with your life!! rat bastards running this country have made certain peace will not break out globally and certainly not within the structure of this crumbling nation!! Now to the good news! Severed heads were found among the cargo of numerous planes flying out of New Guinea! Seems many are trying to get a head in life!
As more and more fiat money enters the market to short gold, silver and prop the stock markets and the banks, inflation will accelerate and will render the price higher no matter how many short contracts will be out there.
Once it gets out of control, gold and silver will rocket to he moon.
You can argue that the government may ban owning gold or trading in gold exept central banks and whatever else suits them. Thus, slowing the stampede.
However, those with physical have gray or black market to protect themselves. Canada having the Maple as currency will most likely allow trading.
On that, you can also argue that Canada, being rich in commodities, may be invaded by the US. Quite possible. It will actually take two days to do that.
Pick your poisons kids!
Mine is Maples.
Rocket bitches!!!
Uh...no one here is envious of Canada, sorry no invasion.
re-unite under the silver banner gold bitches!!!!
yeah yeah yeah usher sher usher
just sitting around hanging the squid
whassup today gold fingers? Another bankster trying to flush us out I see. You gonna be my bitch by christmas if you keep wiping your arse with US greenbacks.
\
I bought ABX November 2008 sold it all the way throught the waves for the next 2 years.
Time for ABX to retest 20 bucks. Line up the trucks bitches - the parties just starting. Wait for ABX to hit retest something like 22 cdn.
Buy a shitload of anything producing and party as the hedgies lose their fucking shirts again shorting gold at 912. Man I luv these dopes. fuck if they get any more stupid, Goldman will ring in another 4 billion quarter.
Why the fuck do people give these fucking fools their money?
GOLD daily charts are still bearish.
http://stockmarket618.wordpress.com
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