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Gold To Rally Year End As Traders Close Some Of Record Short Positions

GoldCore's picture





 

Today’s AM fix was USD 1,237.25, EUR 898.71 and GBP 759.42 per ounce.
Yesterday’s AM fix was USD 1,229.50, EUR 892.62 and GBP 754.57 per ounce.

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Gold rose $3.10 or 0.25% yesterday, closing at $1,240.70/oz. Silver climbed $0.26 or 1.32% closing at $19.96/oz. Platinum fell $3.24, or 0.2%, to $1,358.25/oz and palladium rose $0.25 or 0%, to $715.90/oz.


Gold in U.S. Dollars, 30 Days - (Bloomberg)

Gold is marginally lower today after two days of gains as the Fed's two day policy meeting begins. More positive than expected U.S. data and continuing SPDR outflows may have led to weakness.

Gold's gains in recent days are likely partly due to a short covering rally. Nervous traders may be closing some of their record short positions ahead of a Federal Reserve policy decision on whether to begin tapering its equity and bond friendly debt monetisation measures.

Most economists believe the Fed will not begin tapering till March of next year, which could be prompt traders to further cover their short positions.

Short positions are at multi year highs and if the Fed does not taper tomorrow we will likely see a large short covering rally going into the New Year as shorts close out positions and balance books at year end.

Bearish bets by hedge funds and money managers in U.S. gold futures and options are close to a 7-1/2 year high, according to data from the Commodity Futures Trading Commission (CFTC).
   
SPDR Gold Trust, the world's largest gold ETF, said its holdings fell 8.70 tonnes to 818.90 tonnes on Monday - its biggest outflow since Oct 21.
 
Holdings are at their lowest since January 2009 after more than 450 tonnes of outflows this year caused by traders and more speculative investors channelling money towards riskier assets such as equities and bonds which are at record highs in many countries.

Importantly, and little reported on is the fact that the ETF flows have been matched and greatly surpassed by physical gold in China and imports from Hong Kong into China alone.   

Gold has lost 25% of its value this year after 12 years of gains. There are credible allegations that the market was subject to price manipulation with banks manipulating prices lower through massive concentrated selling at times of low liquidity. Allegations that Chinese entities may be manipulating paper gold prices lower in order to buy physical gold on the cheap are gaining credence.

Whatever, the reasons for gold's price fall it is a healthy development as it has led to the speculative hot money and weak hands being washed out of the market. Gold is on a much more sustainable footing now and is very much in strong hands now, which bodes well for gold in 2014 and 2015.

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Tue, 12/17/2013 - 20:43 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

"Gold has lost 25% of its value this year after 12 years of gains"

no, gold has lost no value because its value is from physics, the nucleus & mass of how many gold atoms you have.

The price is not the value, the price is the cost of acquisition. The value is what you do with it after.

Tue, 12/17/2013 - 20:49 | Link to Comment Compwiz4u
Compwiz4u's picture

Not only was the market "subject to price manipulation with banks manipulating prices lower through massive concentrated selling at times of low liquidity." but it happened at critical technical support lines.

April 12 & 15 2013 were the key dates when they broke the trend going back to 2008. They drove it through that trend line with massive naked short sales. I watched it as it happened.

They did it again on Nov 11 2013 when they broke the trend line going back to June 28 2013.

Breaking those trend lines then created more selling by chart watchers.

That is what the CFTC should be looking at, in addition to the concentrated short postions of the banks.

Tue, 12/17/2013 - 18:40 | Link to Comment honestann
honestann's picture

These guys are forgetting one very important factor, if not the most important factor.

After 12 straight years of gains, the predators-that-be decided gold, silver and precious metals in general were gaining too much interest, recognition, and worst of all... acceptance.

So they decided to go "all in" to give precious metals a big fat black eye to reverse interest, spoil recognition, and most important of all, prevent their widespread acceptance in the west (as savings, as investment, and most certainly as "money").  Above all, their manipulation is about the predators-that-be protecting their fiat, fake, fraud, fiction, fantasy, fractional-reserve debt-paper ponzi-scheme racket.  But this was also about artifically depressing the price of physical gold so the predators-that-be could buy the gold they need to return to Germany over the next 7 years (and beyond).

The predators-that-be achieved their goal.

Pretty much all sheeple and weak minded fools now consider gold and silver to be a fools game, and far too risky for "regular folks".  And they bought up enormous quantities of physical gold at below production cost.

But this manipulation has cost them a lot.  A huge quantity of the physical gold and silver in the world is flying to China, India and other places in the east (except Japan, probably).  To find and source physical gold into the market has become more and more difficult and problematic.

Having gone to all this effort, the predators-that-be are not about to have gold end the year on a high note, especially if they are about to [largely] end their manipulation and allow gold and silver to soar in 2014.  It is crucial to them that gold and silver end the year badly, because calendar year performance is what people remember, look at, and make decisions based upon.

Thus a major upward move in gold and silver before year end is highly unlikely.

What about after year end?

The big question is... can the predators-that-be manipulate gold and silver downward for one more entire year?  Eventually failures to deliver will occur because they can't find enough physical gold to satisfy futures contracts.  And quite a bit of evidence implies that will happen within 3 to 6 months at current prices.

My guess is... the predators-that-be gradually (or perhaps even immediately) cut back or end their manipulation once 2014 arrives.  My reason is... keeping this up for another year might not be practical (or perhaps even possible) for lack of physical to feed into the market.  Plus, the world economy is going to be so horrible in 2014, that will serve to reduce demand for just about everything, at least at the retail level (perhaps even in China).

So the bottom line, according to me, is.  Expect no significant rise in precious metal prices in 2013, but do expect a huge up-year for precious metal prices in 2014 and beyond.

Tue, 12/17/2013 - 17:48 | Link to Comment Haager
Haager's picture

So, it's gold at $1210 tomorrow for a buy, right?

Tue, 12/17/2013 - 17:21 | Link to Comment KingdomKum
KingdomKum's picture

we few,  we happy few,  we band of silver holders  .  .  .

Tue, 12/17/2013 - 15:55 | Link to Comment Hongcha
Hongcha's picture

Buy physical with cash, forget the rest.  Bullion gold and silver are the only bargain out there now.

Tue, 12/17/2013 - 14:50 | Link to Comment Ban KKiller
Ban KKiller's picture

We can not predict the future but we can study the past. Does this give us a hint on gold and silver? It explains everything but the....timing. So I buy all the way down as FRNs are shit. That is for sure.

Tue, 12/17/2013 - 14:16 | Link to Comment SAT 800
SAT 800's picture

Silver has been a brave soldier throughout this recent hammering. It's stood up really well under the rain of blows; and it too seems to be set up for a "great disappointment" on the part of the bulging number of shorts.

Tue, 12/17/2013 - 13:13 | Link to Comment Al Huxley
Al Huxley's picture

818 tons to go before the ability to price using futures contracts comes to an end.  Probably be in 2015 based on 2013's depletion rate, although if the 8 tons/day becomes the norm then it will go a lot faster.

Tue, 12/17/2013 - 13:32 | Link to Comment FieldingMellish
FieldingMellish's picture

I expect the ratio of paper to physical to go to at least 100:1 maybe higher. Perhaps this is why we are seeing the huge price swings recently. Most likely the mechanism for futures-based price discovery will end before the Comex completely runs out.

Tue, 12/17/2013 - 18:09 | Link to Comment jefferson32
jefferson32's picture

If (when) physical and paper gold markets disconnect, the ratio between them won't be 1:100 or even 1:10000000. No finite quantity of paper will buy any physical. Look at the gofo in full backwardation for a hint when it's about to happen.

Tue, 12/17/2013 - 12:38 | Link to Comment FieldingMellish
FieldingMellish's picture

or.... gold gets crushed as record shorts become even recorder. Its all paper trading, let them all die on their paper crosses.

Tue, 12/17/2013 - 12:37 | Link to Comment eddiebe
eddiebe's picture

Yup.

Tue, 12/17/2013 - 11:00 | Link to Comment eddiebe
eddiebe's picture

And so the lambs are led to the slaughter.

Tue, 12/17/2013 - 12:33 | Link to Comment quasimodo
quasimodo's picture

Who are the lambs you refer to? I was thinking the metals lambs(throws hands up in the air)

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