Speculators Sour On Gold And Silver

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...]

Comments

BLOTTO Pladizow Fri, 07/14/2017 - 11:46 Permalink

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

In reply to by Pladizow

Perimetr 38BWD22 Fri, 07/14/2017 - 13:00 Permalink

"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.

In reply to by 38BWD22

JTimchenko Pinto Currency Fri, 07/14/2017 - 13:11 Permalink

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-t… 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!!

In reply to by Pinto Currency

HRClinton Pinto Currency Fri, 07/14/2017 - 14:29 Permalink

"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..."

In reply to by Pinto Currency

crazybob369 BLOTTO Fri, 07/14/2017 - 12:42 Permalink

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.

In reply to by BLOTTO

HRClinton crazybob369 Fri, 07/14/2017 - 14:36 Permalink

"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.

In reply to by crazybob369

aurum4040 BLOTTO Fri, 07/14/2017 - 15:52 Permalink

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. 

In reply to by BLOTTO

meterman BLOTTO Sat, 07/15/2017 - 09:02 Permalink

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.
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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 & onDo I hate the HUCKSTERS - OH YEA!

In reply to by BLOTTO

Soul Glow tmosley Fri, 07/14/2017 - 12:37 Permalink

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.

In reply to by tmosley

tmosley Soul Glow Fri, 07/14/2017 - 14:06 Permalink

>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.

In reply to by Soul Glow

SilverDOG CPL Fri, 07/14/2017 - 15:49 Permalink

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.

In reply to by CPL

afronaut CPL Fri, 07/14/2017 - 16:48 Permalink

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

In reply to by CPL

Bad Goy Fri, 07/14/2017 - 11:32 Permalink

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.

HRClinton Soul Glow Fri, 07/14/2017 - 14:45 Permalink

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.

In reply to by Soul Glow

Consuelo Fri, 07/14/2017 - 11:39 Permalink

  "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 Fri, 07/14/2017 - 11:45 Permalink

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.