Gold shorts covered an enormous 23,518 futures contracts last week - the equivalent of 2,351,800 ounces of gold. With JPMorgan appearing to be calling everyone (here [2] and here [3]) to get their hands on gold to deliver, it seems our concerns over a short-squeeze are starting to solidify [4]. The last time shorts collapsed at this fast a rate was in the 1999/2000 period which saw a considerable 33% squeeze ramp in gold prices over the space of 3 weeks in the fall of 1999. Notably, the gold short position still remains huge compared to historical values - having fallen back only to the previous all-time record high levels (i.e. plenty of room for moar squeeze). In addition to this surge in covering, Gold ETFs saw their first inflows in 2 months.
[5]
as Gold ETFs saw their first inflows in 2 months...
[6]
and the last time we saw shorts cover this size, prices surged...
[7]
Charts: Bloomberg