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Gold & Silver Are Surging On Heavy Volume
Hedgies are the most short ever... and Commercials are the least hedged in 14 years... and it appears rumors of PBOC buying along with dismal data from around the world has sparked a renewed awareness of another looming QE sending gold well north of $1100 and silver back above $15.
hedge funds aggregate net position has been short for the first time in history.
Commercial Hedgers are holding the lowest net short position in gold futures since the launch of the gold bull market in 2001.
And this happened... Silver looking for $15.44 (50DMA) as next test
As Bonner & Partners recently noted, the next silver bull market may have already started...
Silver is down 7.1% this year.
Will this weakness persist? To find out, let’s look at the key factors in the silver market this year.
- Like gold, silver fell as the U.S. dollar rose on the back of expectations that the Fed will hike rates.
- World demand for physical silver fell 4% in 2014, largely due to a record 19.5% drop in investment demand.
- Silver exchange-traded funds (ETFs) did not see big liquidations in 2014. ETF holdings grew by 1.4 million ounces and recorded their highest year-end level at 636 million ounces.
The first two factors helped push silver 19.9% lower last year. That’s more than gold or any other precious metal fell. Despite this, silver production rose 5% in 2014. That added to the pressure on prices.
Why did miners produce more silver when prices were falling? Because of:
- By-product metal. Around 75% of the silver mined is a by-product at gold or base metal mines. These producers will keep mining silver, almost regardless of price.
- Reduced cash costs. The primary silver producers have cut costs since they peaked in 2012. The main way miners do that is by boosting production to achieve economies of scale.
- Bull market hangover. Precious metals were in a major bull market from 2001 to 2011. Producers built a lot of mines in response. Nobody wants to pull the plug on a new mine that’s losing money if they think prices will go higher.
That’s the backdrop. Now let’s look at this year’s fundamentals.
Supply and Demand Are Moving in the Right Direction
Silver mine output has risen for 12 consecutive years (silver mine supply is a little different, due to hedging, but also trending upward). This year could break this trend. Industry experts at GFMS forecast up to a 4% decline in silver output in 2015.Why? It’s not rocket science. There are now fewer major new mines under construction due to lower metals prices.
That leaves scrap supply. But scrap comes from jewelry, and sellers are price sensitive. People like to sell granny’s silver tea set when prices are up. We expect subdued scrap supply until silver heads much higher.
Investment demand – that’s us – is a big chunk of total silver demand: 18.4% as of the latest figures.
There was a big drop in investment demand last year: 19.5%. This tells us that most short-term investors and sellers have left the market. We don’t know any “silver bugs” who were selling. That means that today’s bullion is in stronger hands. And that means that any new buying will have a strong impact on prices.
But will there be buyers?
The Silver Institute expects more silver demand from investors this year. They say that the first half of 2015 sales of silver bars were the fifth highest on record.
Photovoltaics (PV) is another source of silver demand that many analysts expect to rise in 2015 and beyond. Global PV demand is set to increase by 30% in 2015, according to IHS analysts. China alone has plans to install 17 gigawatts of solar capacity by the end of the year.
The solar industry consumes a small amount of silver compared to jewelry and other electronics. Yet, if PV demand delivers in 2015, it will become the third-largest source of fabrication demand for silver.
Wild card: Tesla plans to put batteries big enough to power a house in every home. What happens if that takes root is anyone’s guess… but it will be big. Really big. And the impact on demand for silver would be just as huge.
Time to Get Bullish on Silver
Silver supply went into deficit during much of the big run-up from 2001 to 2011. That may happen again. The Silver Institute expects the silver supply deficit to grow to 57.7 million ounces in 2015. (Note that even if physical mine supply is up, net supply can be down if a lot of the mine supply was forward sold as hedges.) If the institute is right, it’ll be bullish for silver prices.
We believe the dollar is grossly overvalued, and we are not alone. HSBC thinks the greenback’s rise since 2014 could be in its final stage. For the three months between April and June, the U.S. dollar fell against every developed-market currency (save for the yen and the New Zealand dollar).
Many investors seem convinced that the Fed will raise interest rates as soon as September. We view this as unlikely at this stage. Yes, tightening U.S. monetary policy would propel the dollar to new highs. But an even stronger dollar would mean slicing billions off the U.S. GDP, not exactly a desirable situation from the standpoint of the Fed given the sluggish growth of the economy. We think the Fed could delay raising rates until 2016. It might even stop talking about rate hikes indefinitely. Each delay, the dollar will get whacked, and that’s good for precious metals.
On the other hand, if the Fed does nudge rates higher this year, it would likely dampen the stock market. That would increase demand for silver and gold. This could push silver prices much higher, given the small size of the market.
Strong Silver Fundamentals for 2015
The gold-silver ratio (GSR) tells you how many ounces of silver you need to buy one ounce of gold. The record shows that the GSR often surges during a recession. (See the shaded areas on the chart below.)
Silver is about 17 times more abundant than gold in the earth’s crust. Silver and gold prices were close to this ratio for most of history. These facts make many investors think that the GSR should be 17-to-1 and that eventually it will be.
They may be right, but we’ve never found the GSR to be a strong predictor of gold or silver prices. To us, the GSR “suggests a lot but proves nothing.”
The fundamentals are positive for silver in 2015: less mine supply, and the healthy demand we already see is bullish. The greater demand that’s possible could create a real supply crunch. As a result, we expect silver to hold on throughout 2015 and perhaps even increase faster than gold, if the whole precious metals sector turns positive this year.
As for guessing the future, we have no crystal ball. We can say that the case for 2015 as a win-win year for silver is backed by the numbers.
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Hope you bought the dip, this is the program I use that helps me buy those dips.
I'd like a program that not only buys the dip, but loses the dip I bought in a boating accident.
I heard Obama likes to dip
Time to suck in more muppets for the slaughter.
I bought the dip, and I charged it all to the Underhill's American Express card, want the number?
Should have just charged it to the taxpayer's account.
Privatize the profits, socialize the losses baby!
It's amusing to watch goldbugz and silverbugz cling to their dreams of becoming kings of the universe. Here's a little wake-up call for those who are still think that these metals are a good investment:
FACT NUMBER 1: GOLD IS DOWN OVER 42% FROM ITS HIGH
FACT NUMBER 2: SILVER IS DOWN OVER 70% FROM ITS HIGH
Goldbugz are literally drowning in losses. LOL!
Meanwhile stocks continue to make new all time highs month after month. It amazes me that goldbugz continue to shred their portfolios to pieces when they could be making a fortune with everyone else. Why not work with the recovery instead of against it? Why not choose to invest for profit rather than ideology? Investing doesn't need to be as hard as golbugz are making it. The average retail investor is doing way better than them with a sensible buy-and-hold portfolio of US stocks and bonds.
LOL!!! more comedy gold!!
All of my ounces are still intact.
Push that data back a 5 years, 10, years, 15 years, 20 years, 30+ years!!!!!
How long do you expect to live?
Not long obviously!!! Fine by me!!!
Looks and smells to me like a skullfucking of the shorts.
Question before the house to settle matters.
Who is it (big time Charley) that's long?
The most amazing thing about people's perceptions is that they assume that it's JPM and GS, etc getting hammered with shorts and derivative exposure. Unfortunately, that may not be the case. JPM and GS, and their derivative exposure may have been set to profit from a bull market. We don't truly know, do we?
Usually somebody big is the fella who runs the stops.
What's amazing is that it's almost 2016 and you can buy a silver eagle for under $19...
I just buried 75 more lbs in the orchard this month. Gotta jump when the shitz on sale.
Price action today on the COMEX but the COMEX rulebook allows multiple outs of paper settlement for physical delivery.
London's LBMA is THE physical market trading 1.5 billion oz per day (open interest of 3 - 5 billion oz. silver).
London is where the problem is:
http://www.safehaven.com/article/36392/the-lbmas-silver-criticality
STOP STOP STOP stop buying gold and silver. Seriously people, there ought to be a big time bear market here in PMs...at least until the end of the month.
(My bonus check is still two weeks away. I need the prices to be lower or else I might not be able to afford the PMs and will have to buy base metals instead...copper, brass, lead. But I don't want to be racist. I want all the metals.)
It amazes me people will buy evaporating paper.
I miss the subtlety of the real MDB. This is amateurish trolling. The real MDB was much more nuanced.
Stawks haven't done shit since October, trend sideways and down. You'd notice this if you were actually investing or trading.
Fact number 1 and 2: The dollar is in a speculative bubble and soon to continue dying.
"Goldbugz are literally drowning in losses. LOL!"
Haven't lost mine! Their all where my last boating accident occured.
"Why not choose to invest for profit"
Companies levering to buy their own stock is "profit"?
"It amazes me that goldbugz continue to shred their portfolios to pieces when they could be making a fortune with everyone else"
wow, just got the strangest feeling of deja vous... OH! I remember - that's pretty much what everybody was telling me when I was paying my house off during the .com bubble: I will agree w/you that pm(s) should not be viewed as an investment in the traditional sense but count me among those who are building physical silver inventories as currency insurance. I will also admit I've yet to & have to plans to buy gold for a myriad of reasons:
1. at 75x either au is overvalued relative to ag or ag is undervalued relative to au - hmm, which side of that bet do I want to be on?
2. if things do eventually get to people transacting in pm I'd rather be the one in position to make change versus the one asking: "hey, buddy, can you break an ounce?"
a man subjected to potential incineration while wearing another man's suit is entitled to $10,000 worth of airline tickets.
Something about dead cats?
Something about dead cats?
He likes to dip one in his mouth.
"That feels great, Barry!"
"Thunx Regge"
Serious question....WHEN WILL THE FEDERAL RESERVE LOSE ALL SHRED OF CREDABILITY? DID IT HAPPEN TODAY? I can't take this shit show anymore
Loading the boat short with December 14.00 puts on SLV. Monster payday coming. I remain long Central Bank manipulation of all asset classes. Same shit different day.
I'm not falling for this dead cat bounce either. Wish I could argue but I can't.
This article fails to mention that the number one reason gold and silver are down is because of manipulation. TPTB smash pm prices to keep confidence in their failing fiat currency and prop up th stock market for the same reason.
Actually ... I'm more confident when I buy silver around $15 .... than when buying it north of $30.
I've bought everywhere from the single digits to 42 bucks, granted that was only 9 ounces, and there is no question I felt better on the way up than the way down. Thus far I've stuck to it though and put more money down the lower it goes.
I only made 1 buy north of $30 (which was in the very low $30's) .... all my other purchases between $7 to $20's .... once it went parabolic over $30 it just went to high too quickly for me too accumulate.
Throw the program away and buy metals on Fridays.
Can we all say HAMMER TIME together please?
I WARNED YOU ZH...NO, NO, NO, NO....I said please don't have an article about this....damn it
The manipulation is so in your face. Where are the mall cops?
Surely you don't expect enforcement by the Criminal Futures Trading Commission (CFTC)?
Everybody can do a little bit, to hurt Satans Banksters!
Crash JP Morgan - Buy Silver! https://www.youtube.com/watch?v=QCM7rMIqxmkIf the Golden Sack is buying real gold, pay attention.
If ifs and buts were only candy and nuts everyone would have a merry x-mas.
Please who the fuck knows what GS is really buying.
It's a club fuckers.
Allow me to repeat myself...
Here's a little gem:
Keep Stackin!!
Keep Packin!!
They learned this from the government. Tell people it's patriotic or a crime to"hoard" gold, seize it for 20 bucks and change, and then revalue it at 35 an ounce once you have monopolized and cornered the entire market via an unlaful order. So GS says one thing and does the other. Not too hard to follow. Good people had to either believe the government or be so apathetic that they simply didnt't care as they surrendered their 4th amendment rights with hardly a whimper.
That was 1933. Think what would happen today with a bunch of distracted asshats and socialists. I'll bet they could steal a trillion or two of taxpayer funds and give it to their crony friends in the banking sector while people post pictures of themselves on social media. No shit, wanna bet? Any takers?
Well done, sir.
The "surge"in Pm's means nothing to me other than it is more expensive to add to the insurance policy. Pms are a hedge against central banks and nothing else. The manipulation will continue until the whole damn thing falls apart.
Everybody was having fun until little Johnnie won the bet catching a Jart in each eye scocket.
Poor kid won't enjoy the watch maker kit we got him.
I was hoping you wouldn't say anything.
Maybe this time is different.
Someone please create alot more paper Silver and dump it onto the market asap .... I need to buy more Silver sub $15 level next week.
Where did you get sub 15 phyzz?
Been buying physical Maples in the low 17's with paper price sub $15's - since Paper Markert wags the Phyz Market ... I need whoever it is to keep dumping Paper Silver onto market to keep buying phyz as cheap as possible.
Unpossible!!!
Once again, The crooked ass bullion banks always, ALWAYS make the most money. So when you see the Hedgies (large speculators on the COT report) the most short EVER you almost know that the Commerials (bullion banks) who are almost always net short are going to flip long and rip their face off.
See you on the stretcher in ER Hedgies.
Germany gained 100 bn euros from Greece crisis: study
https://in.news.yahoo.com/germany-gained-100-bn-euros-143725759.html
Germany, which has taken a tough line on Greece, has profited from the country's crisis to the tune of 100 billion euros ($109 billion), according to a new study Monday.
The sum represents money Germany saved through lower interest payments on funds the government borrowed amid investor "flights to safety", the study said.
"These savings exceed the costs of the crisis -- even if Greece were to default on its entire debt," said the private, non-profit Leibniz Institute of Economic Research in its paper.
"Germany has clearly benefited from the Greek crisis."
as for the gold article "perspective"
http://finviz.com/futures_charts.ashx?t=GC&p=d1
Let's hope its not another ZH top call.
Yes arbwhore. The bottom is going in for precious metals and crude oil. Patience.
... and down it goes.
For the record, wake me when gold "surges" to > $5,000 an ounce.
there is no spoon.
Is that when you will start buying?
I need some clarification here...
I don't understand what being net short has to do with the current price going up. If hedge funds are net short, doesn't that just mean they're betting on the price to fall? Why would a net short position portend higher prices?
DEFINITION OF 'NET SHORT'
A condition in which an investor has more short positions than long positions in a given asset, market, portfolio or trading strategy. Investors who are net short will benefit when the price of the underlying asset decreases.
Correct, the point is that hedge funds are often at odds with central bankers. The central bankers can move the "price" up or down, period. Moving the price up when the hedgies are short makes sense, for the central banks/bankers!!
Thx
The idea here is that the hedgies usually get it wrong and the commercials (who are net long) get it right.
The idea here is that the hedgies usually get it wrong and the commercials (who are net long) get it right.
Nope. The COT reports in practical effect divide the futures market into three classes of positions, not two. The COT non-reportable ledger is in effect the Small Speculator, though it's not listed as such.
Commercials are large producers, like miners, who mostly bet against future price risk (decreases) to minimize losses from possible decreasing spot prices. But in the same category are large consumers who could be hedging in the opposite direction by locking in current prices if they anticipate an increasing spot price. Even if they expect flat prices, they could still be selling forward to show less risk on their books. Though Commercials are considered the smartest money in the market, it's not all producers and not alll consumers, with the mix being different in different commodities, and changing with time and changing with price level, with possibility of a single actor hedging in different directions for short-term versus long-term because monthly contracts go forward 36 months. Not simple analysis.
The second reportable category is Large Speculators, who are considered the smarter of the speculators, as opposed to Non-reportable positions, who are mostly smalll speculators and the very dumbest money, almost always assumed to be wrong.
With silver here, because Commercials have ALWAYS been long, so far at least, it's a sure thing that the category is dominated by producers like silver miners, who benefit from higher prices. In other commodities like agriculturals, Commercial positions are often dominated by consumers of the raw commodities like corn, wheat, soybeans, etc., the large-scale food producers like Cargill or ADM, and by nature of the farm industry, farmers are not hedging en masse. Point is that simple guides you might find for the COT analysis of one sector, like foods, don't carry over to a different industry like precious metals.
Farmers have been using the futures markets to hedge price risk for way longer than there even existed the futures markets for gold and silver.
The fact that the small speculators are SOO much (more than ever in history in fact) net short means that they are in danger of losing much more than they wagered initially buying those shorts. There is no limit to how much you might lose by remaining net short too long (in the face of rising prices). So if you play the shorting game and have any cerebral activity at all, you want to get out quickly as prices start to rise and this leads to the price surging more and more. It's c alled "covering your shorts" and has to be done with "real fiat" paid to your broker. You might think you can just wait out the surge until prices come back down, but you might get a call from your broker -that you must monetize all your current loss in the next 48 hours.
"there is no spoon."
Correction: There is no gold. There is only paper.
Exactly, there's no gold left in the comex so you should be nuts to be short naked right now.
And that,s why the shorts are gone because if it would rise, they would need to come up with the gold and they can't buy it anymore.
So, the paperprice will now rise untill minning is profitable enouh to supply the markets. And that price is arround 1450/1570
It is so hard to generalize that point when supply dries up. I believe it occurs at 1000 an oz. You cannot effectively move 7 or 8 tons of dirt to capture one ounce at a price less than that as a general rule.. The gold deposits today are thin but not 1500 thin.
"move 7 or 8 tons of dirt to capture one ounce" ... LOL ... obviously your not active in the mining business .... it takes much, much, much more than 7 to 8 tons to make an ounce on avaerge .... we are longer in the year 1880 anymore.
WillieGroper
What is COMEX projected they are ging to run out of phyzz in the coming months and "parties" are grabbing what they can now.
Who will hold the bag if demands on real phyzz at the COMEX outstrip what they have on hand?
I won't sell at €130.-
China did print a billion dollars to have stock market gains last night so there is that.
1% is a "surge" ?
1% is the usual limit allowed for gold. Sometimes 2% but only rarely. To the downside, of course, there is no limit.
Cue coordinated PM smack down in 5.4.3.2.1
Stardates!
S.A.R. - SELL ALL RALLIES
Gold and Silver are heading in one direction.
"S.A.R."... So we should go long on the USD?
I'm no finance guy - obviously - but from where I sit I'm just using the metal to transfer my money intact from this system to whatever follows Project Mayhem.
Could FCX buy out TC.
Really???
I mean gold is up 1%!!! Even oil is up 2%!
And in other news, Russia GDP down 4,6% in Q2! Any thoughts on that Tyler???
Silver is up 3.3% today alone.
Fools buy what has been manipulated up, saavy folks buy what has been manipulated down.
- Are precious metals important to a nation? To its central banks? To confidence in its currency markets?
- Are precious metals an inverse indicator of confidence in a currency? If not, then why all the hoopla and handwringing over a .25 rate hike?
- If precious metals are an important component of confidence in a nation's fiscal and monetary policy, would there be incentive for those in positions of control to make certain that, a. Precious metals remain a 'free' and unencumbered representation of said confidence, or b. Do whatever is necessary to short-circuit the 'warning mechanism' of a nation's fiscal and monetary policy, via the historical role of precious metals, to ensure that their currency markets remain 'free' and 'unencumbered'...?
We hear a lot about solar energy and if it grows as much in the next ten years as some politicians are claiming it could become a significant amount of silver demand. It's not just the Chinese either. The USA is way behind other industrialized nations in developing solar. Certainly the Dems have been talking quite a lot about extending solar, decreasing coal power. Hillary has even talked recently about putting a solar panel on every residential roof. Not that I believe that she's committed to that (or two anything she says during the campaign) but you BETTER BELIEVE that the Dems, at least, are going to continue talking about extending solar.
The same dumb politicians have no idea how they have illegally and criminally been attacking and undermining the silver and copper industries in the USA which will be crucial to realizing those plans. If they were serious they would have been buying these metals (instead of shipping them to China at under the cost of production) and supporting our mining sector.
I predict $5 Silver and $375 Gold....right before COMEX defaults and settles up with paper. Paper is what idiots bought, and paper is what idiots will get back, just a lot less of it!
'surging'
Are you morons that stupid? It will plummet back below $1000/oz by winter.
It is no longer an inflation hedge. That title is gone.
Gold is jewelry in an age where jewelry has increasingly less meaning to the next generation.
There's no yield to it either. You are much better off buying low leveraged real estate assets in desirable neighborhoods.
"Gold is jewelry in an age where jewelry has increasingly less meaning to the next generation. "
Is that really true? I know tattoos have taken over as the new 'status symbol' but I figure to make up the loss selling to rappers and Far Easterners.
ummm what year is this?
This is just subterfuge.
High priced muppet string.
Suuurging by quadrillions of femtocents!
I fully expected to open up my platform and see metals down on the day again like every other time i see a 'gold surging' article but neh to my surprise gold was up!
Up so much in fact it got close to matching the worst performing equity index of the day which suprisingly was /NQ only up 1.03% today vs golds 0.88%)