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Hedge Funds Have Never Been This Short Gold
After the worst monthly performance since 2013 and the weakest close since February 2010, it appears "managed money" has piled in to the momentum trade. According to CFTC, hedge funds have never been more short gold (slashing long bets and increasing short beta by around 11 million ounces net in the last week). But gold is not alone as 15 of the 24 commodities tracked by CFTC showed sentiment swinging more bearish last week (with Brent and WTI also at their most-bearish positioning on record). And this is happening as November US Mint gold coin sales rose 86% YoY.
Never. Been. Shorter...
It's not just gold that is getting hammered with negative sentiment, as Mining.com adds,
At 1.4 million ounces the market is now in its biggest net short position ever, surpassing bearish positions entered into in July and early August. That was the first time hedge funds were net negative since at least 2006, when the Commodity Futures Trading Commission first began tracking the data.
It's not just gold that is being swamped by negative sentiment. According to the CFTC, 15 of the 24 commodities tracked turned more bearish last week.
Those include the major commodities like crude oil, copper, soybeans, cotton, corn and wheat where speculators are betting that these commodities will be cheaper in future. Like gold US benchmark oil West Texas Intermediate and North Sea Brent Crude were pushed to the most bearish positioning on record.
But this negative paper gold sentiment is coming at a time when physical gold demand is soaring... (as Constantin Grudgiev explains)
Following October fall-off, sales of U.S. Mint gold coins rose strongly in November to 135,000 oz by weight (+86.2% y/y) and 237,500 units (+95.5% y/y). These figures include sales of both Eagles and Buffalo coins. Average weight of coin sold also rose strongly to 0.5684 oz compared to 0.4709 oz in October and close to 0.5967 oz/coin in November 2014.
As noted in my note covering October sals, October decline was a correction reflective of volatile demand and also significant uplift in sales in previous months. As chart above shows, sales by weight are now well above period average and above peak period average. In 11 months of 2014, US Mint sold 679,500 oz of gold coins; over the same period of 2015 sales totalled 1,020,000 oz.
November 2015 also marked 20th consecutive month of gold sales/price correlations (12mo running) being negative, suggesting strong and entrenched demand from buyers pursuing long hold strategy and taking advantage of improving cost of holding gold.
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Everyone pressing for the $1,000/oz. level.
Which makes them SUCKERS!
Makes perfect sense. Long phys, short paper. The Systemic Destruction trade.
I remember those silly reports on King World News of $25,000 gold.
Massive paper shorting.of commods isn't the effect of poor commodity prices and outlook, it's the cause of them.
Massive paper comex shorting of commods, interest rate swaps, reverse repos, and maintaining large deposits of their newly printed dollars at the Fed in order to limit money velocity, is how the Fed , Treasury and Banks act together to contain interest rates and inflation in the wake of their massive QE money printing prrograms.
Patience grasshopper
Everyone on this board will be long dead before Gold ever hits $25000
If I was China, sitting on trillions of worthless Amerikan paper, here's what I'd do. Wake up at some weird hour, sell a billion or so of worthless US paper and naked short gold; Then, sell another billion or so of worthless US paper and buy physical at the new lower price. Rinse and repeat.
Knife through butter down to $900-950, with spikes down below $750. Then it's time to load the boat.
On the other side of the spectrum, anyone speculating whether we can get to 1000X earnings for AMZN? It's at around 950X today. NFLX at > 200x. Mm-hmm, yeah, that's a "market", and the stuff you use there is called "money".
I was buying gold at the $300 per oz range up until it passed $1000, but I was buying shiny, yellow metal and not high speed paper. Everybody keeps comparing it to magic money while forgetting why they buy it in the first place. The futures market is just another area of the casino and gold contracts are merely bets at the roulette wheel......
If the Hedge Funds are record short of paper, taking the "money" and going long on physical...dare I say it...all is right with the markets?!
The muppet rape trade.
the real suckers are those who dwell in the gold paper market, doubly if leveraged, four times that if not insiders, eight times that if doing it with their own money
physical gold on the other side is what sensible people have... a bit of it. as an insurance against the rainy day after the rainy day for which some cash might be needed
of course if this imaginary paper market blows up it could be interesting... but the chance of a "New Monetary Order" (NMO) being the accepted alternative is quite big, in such a case
just a humble opinion from your Uncle Ghordius
Plus it's just pretty to look at and hold.
look into it's luster and listen to it's voice: you wanna take me on a boat ride. you wanna take me on a boat ride
https://thinkpatriot.wordpress.com/2015/11/10/a-measure-of-propagandas-p...
https://thinkpatriot.wordpress.com/2015/10/27/ignoring-the-absolutely-in...
Uncle Ghordius is wise man. I can tell because he agrees with my prejudices.
Eight times is nothing. I have seen online trading accounts that offer you up x200+ leverage across all asset classes. Now, these are not available to professional traders only, anyone with $5000 can sign up for one of those. Sense is not the norm these days.
Oh they will get it to 999. Which is 666 upside down. Which is the signal for the Tribe to make the switch as the price skyrocket to $33,333.33. Or something like that. But the fuckers will get it to $999.
Yes. 20 billions of used toilet paper US$ of fiat gold in the middle of sunday night will do the trick. Long live the FIAT BROTHERHOOD OF WALLSTREETSTAN.
WE ARE GOING MUCH HIGHER FROM THESE TIMID AND GAMED LEVELS, FOLKS!!! KEEPING STACKING AND MAKE SURE YOU SPEND SOME QUALITY $$$ ON FIREARMS AS WELL AS THEY ARE ABOUT TO TAX AND REGULATE AMMO OUT OF EXISTENCE!!!
Two things let me know that without a doubt I'm listening to the rantings of a wise man and that it would behoove me to listen to the wisdom dispenced: typing in all caps and ranting about stocking up on guns and ammo. Skoff at your own peril.
More like 850.
The Hedgies are getting destroyed this year, guess they're looking for the lowest hanging fruit to be made whole for the year.
' You can check out any time you like, but you can never leave.'
It can take 2 years to get your money completely out of Ackman's Pershing Square.
http://www.bloomberg.com/news/articles/2015-12-02/hedge-funds-brace-for-redemptions-as-losses-engulf-marquee-firms
2 years is a hell of alot faster than the FED returning repatriated gold to Germany!
BULLISH!
Hey. That chart needs to take $20 more off the price of GLD. Didn't you realize is already 8AM @
Sweet, sale coming up?
I'd love to see the big traders caught out on this.
The sale is on, actually.
Jump in, both feet. This shit never catches fire.
Gold was up 20-25% a year in 2001-2011 period even though inflation was much lower, that was not sustainable.
Bubble needs to deflate now. Expect sub $500 by the end of this decade.
Shoot, why buy at $500? It could be pressed to $35 bucks an ounce, I'm sure you'll be able to find plenty of gold available for purchase at that price.
/s
$500 is likely a little bit on the low end. But in the $700's
The global commodity boom is over, and that includes gold.
In that period we had a 30-50 to one paper to metal ratio. And we are still at $1000 despite the paper shuffling. Care to look at the ratio today BTW? You know what it is?
Perfect setup...
Gold is down $12.90 as I write...hedge funds must know something...
"Mr. Sinclair, Mr. Holter, Mr. Maguire - you're reputations are at the taxi stand and ready to leave...please meet them at the taxi stand before they leave without you. Mr. Sinclair, Mr. Holter, Maguire...."
Hedgies seem to be anticipating a government confiscation or shut down of retail gold sales?
Prices will move down on those events?
Comex implosion?
Does anyone understand the mechanics of this? On the flip side this is saying the dollar is getting stronger. How can the dollar be getting stronger when it's being counterfeited at record rates?
The dollar exchange rate is set where ever the central bankers want it to be set. I do't know why people look at China setting their exchange rates and then assume we do not do the same. It is just a number at which the Fed will buy or sell dollars vs other currencies in the FOREX market. t is not market based demand. It is mandated pricing.
If it is a truly strong dollar with market forces moving it, the economy will not suffer. But unfortunately,the central bank mandated USD exchange rates are way over valuing the USD and it is killing the economy. I am not saying gold will go up or anything, that is set too, but they have to lower the USD exchange rate because implosion is picking up momentum.
now China wants a seat at the table for 10% of the new SDR issues. to play that game you need gold, held in reserve. now to buy gold if you are a cb you want to use paper to short. that way no matter what price gold drops to you always have the physical at that price. however if things turn up then there is a massive short squeeze the likes of which should warm any gold bugs heart. that would probably be accompanied by the sort of stagflation we saw in the 80s when gold went parabolic. to square the circle the catalyst for last centuries big move was the oil shock. is an oil shock possible? you bet your bippy, (whats a bippy, google that)
Because of the synthetic/shadow banking elephant in the room that nobody talks about, is insolvent as fuck and is leveraged to incomprehensible levels. That's where the real QE is flowing to, trying to shore up trillions of synthetic crap loses and write downs.
The bullion banks will slaughter them with a bit of old fashioned manipulation. Rinse, repeat.
The Hedge Funderers are shorting paper gold and going long physical.
the central banks are doing this, the hedge funders follow the fed
US 10-years pay 2.2%. German 10-years only 0.47%, Japan's 0.33%. Yellen will raise US rates, Draghi will continue cutting rates in the EU.
Think realistically about risk for a moment, then ask yourself where you would invest.
An ounce of gold gets 40% more Brazilian fiat than it did last year. Know any other countries with a huge deficit, huge debt, huge money printing, and a slowing economy?
Well spoken sir.
i'm thinking of a certain banana republic with a Kenyan president. am i close?
Don't you mean "Fiat Republic"? :o
What you have done, unknowingly, is demonstrate a flaw in the most basic assumption of every gold bug. And that is that gold will somehow, magically retain "value".
The collapse of Brazil is LOCAL, and not global. Gold still has a high value in the rest of the world. However if the US dollar fails, it WILL take the rest of the world with it. At that point, the value of gold will plummet along with the world economy.
This is exactly what happened in a small "test case" in Oct 2008. Worldwide economic hiccup, and what happened to gold? Did it go up like the bugs predict? No, it went DOWN.
Need to think macro instead of micro. Micro meaning individual countries, and macro being the world.
Not trying to be argumentative, but I don't care if gold (and/or silver) goes up or down. There is comfort in knowing that it will, ultimately, perform differently than fiat. Or perhaps I am simply unaware of macro cases where precious metals lost all their value. Can anyone think of a single instance when that occurred?
You are using the typical false argument of "metals lose ALL VALUE".
I never said that, you did. I'm saying that in a worldwide crash, the value of PMs will be a fraction of what people think they will, or should be. They won't be the store of value/wealth that they are made out to be right now.
What will continue to be "valuable" in a severe downturn? The basics needed for everyday survival, like food, water, shelter, energy and security.
2008 plunge was because of the surge in gold repo, nobody wanted anyone's paper, even overnight, and wanted real collateral, that boosted the paper gold supply. This time around will be the same.
Question: would you rather be right, right, right, right, then VERY WRONG...or wrong, wrong, wrong, wrong, then VERY RIGHT?
And one US dollar bill buys 50% more Brazilian fiat than it did last year... Gold was still a bad investment however you look at it. Brazilians would be better off buying dollars to preserve their purchasing power than gold.
if they can get critical mass to detonate the paper market it makes sense but strikes me as a dangerous play b/c paper isn't merely overvalued, it's completely worthless so it's not a snow covered slope you're playing on, it's a vertical ice wall...
Yeah, that's great if you live in Brazil, or can even get there.
With the global financial crisis of 2009 long over, and the widespread fear of abrupt financial and economic crises also long gone, gold has returned to being just another commodity and will ride the commodity price decline down even MORE than other commodities because of the crisis-era premium that it still carries.
Gold will go DOWN to between $700USD and $800USD, ie close to actual cost of production. Anyone who believes in buying gold in anticipation of price increases due to upcoming crises should prudently wait for the price of gold to bottom at the cost of production.
what if the cost of production goes higher?
Then those miners who can't cut their costs will shut down and/or go bankrupt. There are still major mines in the world producing under $600/oz.
Just like what's happening right now in every other mining industry around the world. Some make it, some don't.
However gold isn't like other commodities, gold is never "used up", and simply accumulates ever greater quantities. Only 12% of annual gold production is used industrially. The rest is all discretionary. The annual amount of gold mined per year only adds 1% to 2% to the existing stockpile.
the central banks corner the available supply of gold using fiat currency, [because their customers demand it] the primary supply of gold is new gold being mined and rising cost of production has taken supply off line?? the IMF is going to ADD China to the allocation, that means more SDR, an inflation of the global currency and less physical gold available [what are you seeing now?] the real kicker is the cbs expanded gold reserves, which by the time you figure it out [they tell you what they are doing] the trade is done. however the miners remain the one source of gold cost or no cost of production, does anyone talk about the cost of production in oil, no its very low, the real question will QE4 lead to malinvestment in gold mining. as it did in natural gas and oil. i think it will however gold is not a consummable and with the expansion of fiat dollars in the global context the price of that gold goes higher.
Central banks purchace around 15% of annual gold production. Jewlery accounts for over 50% of annual production. It's not the banks that control the price, as everyone believes, it's the jewelry mariket.
HOLDING gold doesn't affect the price, regardless of the quantity, which is what the central banks do. Buying and selling is what moves the price, and the largest buyer is the jewelry market. Economic downturn means less disposable income for jewelry, and a lower gold price.
Without the panic juice-up, gold price will go to whatever the cost of production is. Should expect gold miners, like all other commodity producers, to be squeezed financially, reduce operations to reduce costs and cope with accumulated debt.
The biggest long-term downside risk to the gold price in the absence of panic juice-ups, is the potential for finding huge new deposits of high-concentration gold (plus many other expensive metals) through the deployment of the ocean-floor mining machines currently under development that will start being deployed in late 2016 or 2017.
If these machines work as expected, then they can just crawl around ocean floor volcanic vents sweeping up huge amounts of very highly concentrated metals that have precipitated out of super-heated water expelled from volcanic vents. Then the cost of production would drop dramatically, the supply of gold would greatly increase and the price of gold would drop like dropping a hunk of gold and watching it fall back to earth !
"Without the panic juice-up"..... What kind of bubble do you live in? Everywhere you look, there is warning sign after warning sign that and we as americans are acting complacent, like we cant see the writing on the wall. Yaun inclusion into SDR, World superpowers on the brink of hurling nukes towards eachother (and that was just yesterdays news)....ect
Do yourself a favor and venture out of your plush office, get off of CNBC and make your own judgement of the current state of world affairs!
Our stock market is at an all time fucking high because of the fed "juice-up" of our monitary base and because interest rates are at 0. Big companies like apple, getting loans at 0% interest, then buy back their own stocks, just to "juice-up" their stock price ensuring their end of year bonus' (you wouldnt know anything about year end bonus' would you?".....)
Word of advice from someone that doesnt have their head stuck in the clouds or stuck up Yellens twat..... get off the fucking juice while you can still find another "sucker" (PPT) to buy your worthless paper! For you KNOW something is wrong with the world when the hottest hookers in the world (Greece) will sell their ass for a sandwich..... end rant!
World and USA have lots of problems but those problems are not going to abruptly immanently crash the financial and economic systems and therefore the juice-up for gold is gone. World and USA will struggle, not collapse. Most people will invest to provide income, not pre-position their savings in no-interest-paying declining-price gold to wait for infinitely prophesized but never coming apocalypse. THAT is reality.
Dont you think we (the world) are worse off today than in 2007? MANY MANY MORE geopolitical risks happening right now.... agree?
Before you answer this next question, take out of the equation the crack you have been smoking for the last 8 years CALLED QE..... Is the financial state of our country and the world actually better off today then 2007?
Stock market at an all time fucking high.... REAL unemployment of 94 million people at an all time fucking high.... 19 Trillion dollars of national debt, at an all time fucking high.... 200-500 trillion in unfunded liabilities, at an all time fucking high. ARE YOU HIGH? We are now fucking with China in the CHINA SEA and also shooting down russian jetfighters by proxy..... Is this bullish for you?
Ben, is that you?
You are obviously both young and prone to fantasy and emotional irrationality. Severity and risk of all the stuff going on today is small compared to periods in just the recent past, eg WW2 and the cold war - when USA and communists were on verge of launching nukes at each other, eg Cuban missile crisis - NOWHERE NEAR THOSE LEVELS NOW - in spite of your frantic panic rant.
Kudos using the tried (tired) and true technique of "divert, deflect and deny" .... Now, how about answering my question.
Coupled with the significant increase in geopolitical risks, Is the financial world better today, than 2007? How about 1962? 1941? 1929?
Question ol'timer, how much money (juice) was printed (QE) by our fed during the great depression, WW2 and the cuban missile crisis?
Bonus Question...... Tell me this.... during the great depression, what stocks actually rose during that crisis?
Personal question, what are you going to do when we run out of crack (QE) and your paper stocks are not worth shit? How are you going to afford your daily sandwich? I bet there are a few hooker from Greece that can tell you....
Here is a hint..... commodities! Something tangible (something you can touch (or spank) Come on old timer didnt your parents teach you anything?
It amazes me how easily one forgets!
Step away from the punchbowl and get off the (QE) dope, for you are highly addicted and it's clouding your judgement!
Here is a link from drudge TODAY supporting my thesis: http://www.miamiherald.com/news/nation-world/world/americas/venezuela/ar...
COMMODITIES BABY!
There is no single cost of gold production. The cost of production for a given plot of land depends on what quantity of gold it contains, whether it is spread out or concentrated, and within what geological formations at what depth it's lodged.
Cost of production could range from $0 for a huge gold nugget sitting on the edge of a lake bed to $100,000 an ounce for a few grams of dust disbursed through tons of dirt underneath 100 feet of granite.
As gold price falls or rises, gold mines close or open accordingly according to each one's individual cost of production.
At the present time the industry average cost of production is near the spot price according to Rangold. They say mines are high-grading and selling all they got. Half of mines are not viable at current prices. That doesn't mean gold will go up because firms can operate at a loss, borrow money, merge - who knows. I'm just addressing cost right now.
http://www.bloomberg.com/news/articles/2015-11-27/half-of-gold-output-ma...
the trade is on i believe, you can buy physical here and lock in the price by going short the paper. what it means is you have the bottom at the expense of any near term gains. smart
In the late 1990's early 2000's they were shorter as the commercials were actually net long. Just because the CFTC didn't measure it doesn't mean it didn't happen.
So many people put emphasis on the spot price of gold, yet never really look at the movement in the acquisition price of physical bullion; if you are a speculator thats fine because you're playing the market not the product per say. However if you're using gold in its natural role, i.e. that of an inflation insurance, spot price is irrelevant. The actual cost of getting physical bullion home and into your safe is a much more accurate. For all the movement in the spot price, physical price is showing a much more stable trajectory. i.e. it takes more fiat to buy physical.
It might seem an obvious view, but it's an amazing paradigm shift when gold is viewed in this way.
www.teamramgold.com/about-us
In what utopian world do you live in where the paper price and physical price aren't LINKED? When your "paper" price goes down to $900 are YOU going to buy my physical gold for $1,100?
No? Why not? Didn't you just said that physical was more valuable than paper?
Um hello, when the counterparty for your paper gold fails, your math falls completely apart. Right now he's leveraged at 294:1. So ask yourself: do you feel lucky?
COMEX paper gold holders are kept honest every 1-2 months at contract settlement. 294:1 means nothing at that point, paper must be 1:1 and physical must be 1:1. And they always have achieved that 1:1 and always will achieve that 1:1 so long as the spot market can be tapped using cash to make them so.
Accordingly, thanks to our friends the arbitrageurs, if you see a run on gold in spot, it will be reflected in COMEX, and vice versa.
The only paper gold out there masquerading as physical gold is held by owners of gold ETFs and other unallocated gold holdings. They could be in for a rude shock at some point.
DO I NEED TO SAY THE OBVIOUS?
if one big player forces a Short Squeeze, they will walk away with thr biggest purse in history from the Precious Metals market.
This should be obvoius.
Its unbelievable how 'apparently sensible' traders set thrmselves up for losses.
Cant believe that the World is staring a Major War (Syria) in the face, and dummies are still shorting Gold. Brainless.
Time to prepare for contrarian play?
The funds are all shorting gold becasue Yellin is about to announce a rate hike. As of this moment, gold is at $1050 and silver at $13.96
The deployment of the ocean-floor mining machines currently under development will do to the supply and price of gold what fracking has done to the supply and price of oil and gas, ie supply UP, UP, UP and price DOWN, DOWN, DOWN.
This is going to be reality VERY MUCH SOONER THAN the cult prophesy of apocalypse.
13 910 oz away from registered gold yesterday. 120 k left.
http://www.cmegroup.com/delivery_reports/Gold_Stocks.xls