More Strange And Disturbing Action In The Paper Gold Market

 

 

 

More Strange And Disturbing Action In The Paper Gold Market

Posted with permission and written by John Rubino, Dollar Collapse 

 

More Strange And Disturbing Action In The Paper Gold Market - John Rubino

 

For at least the past decade the behavior of the people who trade gold futures contracts – and thereby determine the metal’s price – has been generally predictable: The “commercials” – big banks and companies that buy gold to do things with it – have suckered the speculators – mostly hedge funds who chase trends – into going very long and very short at exactly the wrong time.

 

Which means the price action in gold six or so months in the future was broadly predictable. When the speculators were way long, it was going down and vice versa.

 

But this year the action – as portrayed in the commitment of traders report (COT) – has departed from the script. After taking on near-record long positions early in the year, the speculators have barely scaled them back from levels that are extremely bearish for gold. Meanwhile gold, instead of tanking as recent history says it should, has been treading water.
And now both the speculators and the commercials have started ramping up their current bets, with speculators going from very long to even more long and commercials going from very short to even more short.

 

 

Here’s the same data in graphical form. Where historically the silver bars on top (speculator longs) and the red bars below (commercial shorts) would be expected to converge at the middle of the chart, they’ve diverged and stayed far apart. So the speculators have not been washed out and instead are becoming even more bullish.

 

 

If history still matters (a big if in today’s world) the COT trends point to a bad six or so months for precious metals. Though – and this might be the rationale for many speculators – the global financial system has become so fragile that betting on a crisis that sends capital pouring into safe havens is now a permanently good idea.

 

In that case the solution for individuals is easy: Just buy silver and let nature take its course.

 

 

Questions or comments about this article? Leave your thoughts HERE.

 

 

 

 

More Strange And Disturbing Action In The Paper Gold Market

Posted with permission and written by John Rubino, Dollar Collapse

 

 

 

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Eric Sprott and Craig Hemke - Eric Sprott Talks Global Demand for Metals, Impact in 2018 (Weekly Wrap-Up, December 1, 2017)

Comments

east of eden Wed, 12/06/2017 - 06:11 Permalink

An article that talks about gold and then advises buying silver??? WTF?If you intend of buying (moar) silver, you need to be aware of two things. One, it is heavy and if you have a lot of it you better have a sturdy wheelbarow to haul it around in. The second little item is that JP Morgan has warehoused thousands of tons of silver while at the same time shorting the hell out of it. Any serious price appreciation in silver is going to be met with massive silver sales, driving the price down.So let's see. Article written by Sprott money. Sprott has over 2 billion in silver inventory it would like to get rid of, so, pump silver. 

cpnscarlet east of eden Wed, 12/06/2017 - 06:34 Permalink

And you have learned about Morgan's warehouse of silver from the PM pundits who have been wrong about everything for the last six years, right? It's all a central bank shitshow - all lies. Silver is the cheap, under-appreciated asset in a time of the "everything bubble". Sprott may be a crooked shill, but he is right about "just buy and let nature take it's course" at least for the time being.

In reply to by east of eden

CHX13 BandGap Wed, 12/06/2017 - 08:41 Permalink

And when the CONeX/LBMA-duplicity fails (and fail it will, being leveraged 200+ paper units to every deliverable ounce of actual "goodies"), it might mean you got the real McCoy for pennies on the dollar. Stack (especially on the dips) with spare fiat and wait it out... In my case, if it's not for me then for the next generation; they'll be glad I did this, some/one day. In the meantime, try to live a happyd and healthy life as best as you can. GLTA.

In reply to by BandGap

Fester east of eden Wed, 12/06/2017 - 09:17 Permalink

It’s pure speculation that JPM has acquired thousands of tones of silver.

If they do have that much silver ready to flood the mkt, it will be 50 years or longer before we see any appreciable move to the upside.

I personally don’t think they could have acquired that much metal without causing a severe mkt shortage.

In reply to by east of eden

anarchitect Yellow_Snow Wed, 12/06/2017 - 07:32 Permalink

Because when the manipulation ends, it will be a sight to behold.  Meanwhile, it's insurance against the hubris of central banks and governments, both of which are in ample supply.  And allocated physical is the only liquid asset without counterparty risk.  Cryptos might also fall into that category, but it's too early to say.

In reply to by Yellow_Snow

Pearson365 Wed, 12/06/2017 - 07:50 Permalink

I recall that every time over the last few years that a shortage of retail silver coins existed, there was no shortage of 400 oz bars.  Silver is clearly more easy to manipulate and idiots like Bix Weir are continuously pumping it.  If he recommends it I stay away from it.

canisdirus Wed, 12/06/2017 - 08:13 Permalink

The only decent buy in PMs that you’re not squirreling away physically for a total collapse of society is platinum. Gold is currently slowly reverting to the trend line after being greatly overvalued for years, silver is somewhat overvalued, and palladium is ridiculous. When palladium is above platinum, something is very wrong. When gold is above platinum, you have a huge speculative bubble. Both are true right now.

spheres777 Wed, 12/06/2017 - 11:23 Permalink

its an interesting observation. a stretched band will eventually snap i suppose. betting on the specs is contrarian at best.imagine a scenario or two where specs prevail. commercials cover,( lets say they are 10/1 or 20/1 weighted in physical compared to paper contracts) specs add in. the commercials are holding back all physical metal whilst eating significant losses on the futures, divesting nontheless, and the whole thing goes limit up day after day. Metal is unatainable and the average joe (99.5%) is left for broke "holding the ponzi" in all its forms. joos your daddy and nearly everyone is begging for fema camp admission.have a nice day