Speculators Sour On Gold And Silver

Tyler Durden's picture

Authored by John Rubino via DollarCollapse.com,

The stars — in the form of smart and dumb money futures contract positions — have once again lined up favorably for precious metals. Here are those positions for gold and silver as of Tuesday the 4th. Notice that speculators (the dumb money) got a lot less optimistic — that is, less long and more short — while the commercials (the smart money) got much less pessimistic.

The closer each group gets to neutral, where their longs and shorts are about equal, the greater the likelihood that metals prices will rise in the subsequent six or so months.

And here’s the same data for silver presented in graphical form. The top bars are speculator longs and the bottom are commercial shorts. When they approach the zero line that’s bullish.

So here we are once again, at the tail end of a grindingly-protracted precious metals correction that has led a lot of people to give up altogether and sell their mining stocks. The next few months should be much better, especially for holders of the junior miners that were caught in the GDXJ downdraft.

Playing this indicator - known as the Commitment of Traders Report, or COT - is of course just a way to pass the time while the real underlying forces affecting precious metals work themselves out.

Those forces - rapidly accumulating debts which leave central banks no choice but to inflate away their currencies - are still accelerating in most places, and the inevitability of mass-devaluation will become clear when the central banks now talking about “interest rate normalization” and “balance sheet reduction” are forced to admit that those things are impossible, and all that’s left is debt monetization as far as the eye can see.

On that day it won’t matter what futures traders - or junior miner ETFs - are doing. The physical precious metals bid will go infinite — that is, big players holding useless cash will buy up all the gold and silver that’s available, at pretty much any price that’s demanded.

[ZH: Additionally, Bloomberg's MarketLive blog pointed out this interesting relationship. As the volume of negative-yielding debt in the world rises, so it appears demand for 'paper' gold picks up and vice versa...]

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Too-Big-to-Bail's picture

Total Short change -666 not a good sign

BLOTTO's picture

Im still waiting for the past 5 years the silver i bought at 31, 28, 24, 22 and 21 dollars to break even and my gold at 1,500.
.
And yet my moms ry.to is paying her 4-5k - Quarterly - nevermind the share price increase - while i stare at my shiny.
.
If i just invested in ry i would be up over 100,000 instead of stuck 10,000.
.
Good times

Pinto Currency's picture

Analysis of a fraudulent market is a waste of time - and will lead to investment loss if acted-upon.

Consider longer term positioning in the metals market - secure real metal:

http://www.safehaven.com/article/42600/transition-of-price-discovery-in-...

38BWD22's picture

 

 

This is worth keeping an eye on (Commitment of Traders, a few days out of date, but a free service):

https://www.barchart.com/futures/commitment-of-traders#/technical-charts...

"Buy when the lines get close together"

Perimetr's picture

"Speculators" ???

Oh come on ZH.  How many years does the routine rigging of these markets have to go on before you are willing to stop using the politically correct wording to describe these events?

The big banks work with the Treasury Dept and Fed to suppress precious metal prices, in order to support the dollar. The banks know in advance when the dumping of naked short contracts will take palce.  

The price is driven down and then the shorts make their money.  The process is totally illegal, except that the government sanctions it, so there will NEVER be any prosecutions or interventions.   The "speculators" involved in this are primarily the bullion banks.  

It is a fascist process and if you help support it by providing these sorts of explanations about "speculators", then you are supporting the system and complicit in it.

JTimchenko's picture

I disagree completely. Analysis of a fraudulent market is absolutely the key to making money. If you understand what the manipulators are doing and how they do it, you can catch the waves and make lots of money. That's not an endorsement of leveraged or short-term trading. Doing that will insure that you, as a non-connected investor, will become the victim of a bankster. However, having a general idea of when the banksters are running scared even as they are pounding metals prices can provide you with an incredible insight as to when to put your money on the table and buy the physical stuff at a discount, as opposed to at a premium.

There is an absolutely excellent article, for example, that explained perfectly the shenanigans that happened in late June and early July. It can be found here. Read what the blog's author has to say and you'll be in a great position to understand all the bullshit in these markets.

http://averybgoodman.com/myblog/2017/07/08/recent-gold-price-declines-th...

It's probably the best thing I've read on the subject of gold, silver and market manipulation ever. So, getting educated definitely helps and it not a waste of time. Keep on stacking my friends!!

HRClinton's picture

"Analysis of a fraudulent market is a waste of time"

True. Yet ZH just loves to act irrational, when it comes to PM. They and their holding bloggers keep touting the virtues of buying bullion, when they have shown time and again that it's a rigged casino.

Apparently junior miners and bullion dealers hold sway with ZH. "Ad money talks..."

crazybob369's picture

You need to rethink your reasons for purchasing PM's. Speculation? Investment? Security? Insurance?

In my mind, PM's serve only one purpose; insurance against currency devaluation. Everything else is just a pipe-dream.

Not sure about much, but I'm pretty sure (assuming humanity is still around) that an oz. of gold will buy me the same amount of goods & services, 50 years from now, as it will today. Twelve, hundred dollar bills, probably not so much. They might be useful as toilet paper, though.

HRClinton's picture

"PM's serve only one purpose: insurance against currency devaluation. Everything else is just a pipe-dream."

Agree. Yet peeps don't see the irony of Weimar devaluation of the world's Reserve Currency itself: the USD.

The day that the Dollar goes hyperbolic, is the day you will have bigger problems than the price of PM.

Beware of financial charlatans, who offer these 1-dimensional, Magic Bullet solutions. They get their rent-seeking commissions, you get the Tab.

aurum4040's picture

Buying near the top and or selling at the bottom will yield those results. Personally during the last run I sold 90% of my silver at $45 and all of my gold at $1600. Luck was on my side. Logic played a part as well. Doesn't always work out that well. But keep that in mind now. Keep holding for next run. I jumped into NUGT in early (Feb) 2016 and have held since. Lost a chunk on paper bc I didn't cash out. I refuse to get rid of it because it gold will run again, just a matter of time. 

afronaut's picture

You bought too high. You need to look at a 20 to 50 year chart. To me both look top heavy. 

Always look at historical charts with commodities to determine what is historically high and low.

meterman's picture

I feel your pain - I am also waiting - bought at $1700/oz and 33.00/oz. Sold all my silver last year since it was obviously going nowhere. Hoping for $1400/oz gold so I can sell all 300 coins.

Remember these guys.

GOLD & SILVER

 

 HUCKSTERS

 

Alpha Order           Date “The End is Near”                                              was Proclaimed

 

Ted Butler                         November 2014 

Gerald Celente                 October 2014

John Embry                       September 2014 

Marc Faber                        Everyday

Bill Gross                           December  2014

Andy  Hoffman                 October  2014

Bill Holder                         All of 2014 & ON

William Kaye                    August 2013      

Doug Noland                    May 2015

Harry Organ                    December 2014  

Raoul Pal                          May 2014

Rick Rule                          October 2013

Richard Russell             February 2014 

Jim Sinclair                     September 2012 to Infinity

Ed Steer                            None Yet, but a Huckster 

Bix Weir                           May 2015

Jim Willie                        All of 2014 & on

Do I hate the HUCKSTERS - OH YEA!

Déjà view's picture

Graph looks like a flea comb...7 year itch coming up...

tmosley's picture

"On that day" the markets will choose money that is more like what they are used to, which can be used for internet transactions, and which most of all requires ZERO trust.

PMs ain't it, I hate to tell you. 

JonNadler's picture

if you hate to tell us and we hate to listen, why don't youj ust go away an do all of us a favor

tmosley's picture

Hahaha, just a loser with no argument. Typical of the remaining goldbugs.

Soul Glow's picture

I'll give you an argument.  Gold has actual value.  Sure the price and what the dollar value can change - especially when paper assets can be used to short the physical metal even when they do not account for the true amount of physical that actually exists - but gold and silver have actual value.  They can also be divided into amounts large and small, and continue to sit on bank balance sheets (which means banks use them as a medium of exchange).  All this adds up to the fact that gold is money.

38BWD22's picture

 

 

Far as I can tell, Bitcoin has utility, risky, yeah, but still.

Best to hold 10x $-value in Au/Ag/Pt than in Bitcoin.

tmosley's picture

>All this adds up to the fact that gold is money.

For now. The markets will dictate what is and isn't money. When the dollar fails, will people prefer to trade prepper tokens (90% silver quarters and dimes, which you have to look at very carfully so as not to get a worthless fiat change, and pray that it isn't a fake) for food at the local farmers market, or will they prefer to use cryptos that act just like their old debit cards only without the need to trust in banks and governments?

But don't think about that. Instead just use the platitudes of bankers who died decades before the technology in question came to be.

MrMorden's picture

And if the infrastructure is screwed enough by the crash that there are rolling blackouts and ISP interruptions?  Then how will you pay in Bitcoin?  Gold and Silver require no electricity to function.

SilverDOG's picture

Your reply: is not an arguement.

A simple tangent run away.

Your foundation is cracked, and time will show more weaknesses, and internal misery.

cooky puss's picture

Market will dictate what is and isn't money? Please define that market you speak of.

"Prepper tokens" over 0s and 1s any day of the week.

c2nnib2l's picture

typical for bitcoin holders bying two with pocket money and hoping this will explode. because they say so on gizmodo and pc world magazine

 

ali-ali-al-qomfri's picture

irritated oysters yield pearls.

raeb's picture

When btc has been around as long as gold, and has a long term record, I might agree with you.  Trouble is, neither of us will be here.

CPL's picture

No one needs gold or silver anymore than they need a king or a queen.  Ancient and stupid relics get thrown out.

espirit's picture

Try and tell a woman she doesn't need gold or silver baubles and,

she'll tell you she wants them, or else.

tmosley's picture

I don't think they will want it when the price goes down. They only value it because it signals status.

Buy them a mansion with a bitcoin in a few years instead.

afronaut's picture

Hey I don't doubt that. I honestly hope that happens. 

I hope I'm in on it. I won't stop stacking though

SilverDOG's picture

Swallow the ponzi paper scam, DO IT !

No one needs many things significantly valued by others, who own and operate...

You guessed it, THE WORLD.

Funny their attraction to metals and social suppresion of said's value to the public... mired in debt.

"What cha gonna do, what's cha gonna do when they come for you"

Knock Knock dreadlocks.

afronaut's picture

Umm that's exactly what the experts were saying at 252\oz

I ignored it and rode it back up. I'll bet nobody here except a couple of hardcore gold bugs thought that it would rally to 2000. Since the financial experts and banks were calling it a relic from the past. Useless, no industrial or financial purpose. 

Remember a decade ago? Cheap oil under 100 a barrel was finished. It's the new normal ect...

SILVERGEDDON's picture

Same as it ever was. 

Buy the fucking dips.

Or, go put your nuts in the Bitcoin vice, and turn the screw.  

tmosley's picture

Do what you've always done, get what you have always got.

afronaut's picture

I do. I was in Ag at under 5 bucks and Au from 250. Best ROI I have ever made. I'm thinking about getting into cryptos but don't understand yet how to go about it.

Raffie's picture

24/7 real money being attacked in favor of paper PM and USD.

Yawn......

crazybob369's picture

Au contraire my friend, I think it is an excellent sign. Let the apocalypse begin.

CPL's picture

-cackling intensifies-

 

Bad Goy's picture

Price of gold gets cheaper.  That means I can buy more with the same amount of money.  I don't think these people understand what speculation means.

Soul Glow's picture

Good.  Fuck the speculators.  They know nothing.

38BWD22's picture

 

 

"That's for damn sure."

- Jack Reacher

HRClinton's picture

Sounds like you know Jack.

;-)

38BWD22's picture

 

 

LOL!

If I were 35 years younger, strong as an ox and unmarried, that life would have a lot of appeal.  Travelling light has a certain beauty to it: a passport, an ATM card, a small wad of cash, a folding toothbrush and a few gold coins.

HRClinton's picture

I know of a Chinese-American M.D. in CA, who makes a fortune in BTC speculation. 

He's given up on PM speculation, because the margins are too thin and the Casino has rigged it too much.

Instead, he buys BTC low and sells when it hits his target margin. He makes money on the action, not in holding the asset for the long term. Apparently he's smarter and richer than the average white goy.

BrokeMiner's picture

loaded up again on some of my favorite juniors this week. maybe, just maybe this is the time the miners get their heads our of their asses

takeaction's picture

I am going to say one word.........NOPE

assistedliving's picture

bought the last two "dips" (collapse)

but this time?  

BM you're a better man than me and hope you dont go....

Consuelo's picture

 

 

"The next few months should be much better, especially for holders of the junior miners that were caught in the GDXJ downdraft."

Anyone here want to roll the dice as to how many times this (near exact) phrase has been uttered/predicted/projected/prophesized, etc., ad-nauseam, since the blow out in 2011...?  

 

 

syzygysus's picture

Buy your bitcoin here, bitcoin, we got bitcoin.  BITCOIN! 

 

ah, thanks sir, one order right up, you want that with mustard or extra satoshi sauce?  Its squeezed fresh from the backdoor of the NSA.

 

It would be interesting to know how much 'dumb money' I mean speculators bought Bitcoin instead of paper gold.