Paper Gold Market Normalizing, Silver Getting Even More Extreme

Authored by John Rubino via,

The past few months have seen some unusual, maybe even unique, developments in the gold and silver futures markets, with gold becoming extremely bearish and silver almost ridiculously bullish.

Neither imbalance has amounted to much in terms of price action, so it’s not clear whether the most recent changes matter. Still, the action in both gold and silver futures remains unusual enough to bear watching.

Beginning with gold, large speculators have lately been hyper-bullish and commercials extremely bearish. Since the former tend to be wrong at the extremes and the latter right, that was disturbing for anyone who didn’t like the idea of gold tanking in the short term.

Gold did fall a bit lately, to the low $1,300s, and that seems to have been enough to cause futures players to start unwinding their extreme positions. Speculators cut their net long bets by about 30,000 contracts and commercials cut their net shorts by a similar amount, which in the scheme of things is a big change. Another few weeks like this and both speculators and commercials will be close to neutral, which is positive for gold’s price going forward.

But silver has been and remains the really interesting case. Speculators – who are almost never net-short – spent a few weeks in that state before briefly reverting to slightly net long. But last week they jumped back to net-short in a big way (the bottom row shows the change in each position).

Here’s the action presented in graphical form, with the gray bars representing large speculators. Note how in the previous couple of cycles (early and late 2017) the speculators’ net positions got close to zero but then bounced back quickly to the more normal net-long. But in the current cycle they’ve been net-short for most of the past two months.

This has flummoxed industry analysts and led to some silver-to-the-moon predictionswhich, based on the rising volatility in the broader financial markets, are at least plausible.

Gold-Silver Ratio Also Looks Good For Silver

An intermediate-term indicator that’s also good for silver is the metal’s price relative to that of gold. As you can see, it’s getting to levels that over the past decade have seen silver subsequently outperform gold for a while.

To sum up, gold’s technicals are improving and silver’s are so positive that you have to wonder if there’s a catch, though what that would be isn’t obvious.

Which leads to the “how do you buy and store it?” discussion, which is more important with precious metals than with any other asset class. It’s actually possible to be right about the direction of these metals but so wrong about acquisition/storage strategy that you end up losing rather than making money. So research the dealer you eventually buy from, and keep what you buy in a safe place. Secure vault storage for gold and silver is a good way to diversify your holdings beyond what you keep at home or in a bank safe deposit box.


Sudden Debt CaptOveur Sun, 05/06/2018 - 19:26 Permalink

Right now, I don't feel like doing anything in PM's.

It's been pumped on youtube, blogs, everywhere and nothing changed. There are also no reasons why it should change so it's all just a trap.

And if nothing happens before 2021, I'm selling my silver. Then I'll be sitting on it all for more then a 17 years and that's not what I like to call an investment. The gold can stay a few years more but not forever. Everything I invested in the last decade went up 10 times beside my metals.

And after 17 years I've read about every story and I've seen all the reruns of all those stories to many times.

Never believe the pushers on youtube or the know it all guys that just want  to sell you more of it.

All those guys pumping it have way to much skin in the game to be credible.


In reply to by CaptOveur

Theosebes Goodfellow CaptOveur Sun, 05/06/2018 - 19:33 Permalink

Ain't that no shit, Cap'n.

I've stopped thinking about it. I read the stories with a disinterested amusement. I am in PMs because I believe them to be a better long-term retainer of value than FRNs. They are, after all, real money, but I do not expect to "hit it rich" for having held them if & when the USD takes a shit. I doubt I will like living in the world where the USD has lost a lot of its purchasing power.

In reply to by CaptOveur

amusedobserver Theosebes Goodfellow Sun, 05/06/2018 - 19:52 Permalink

When I was in junior high back around 1967, I found a twenty dollar bill in the lunch area and turned it in to the office.  (Ok, the real story is I stupidly told my mom and she made me do it.)  Of course back then the dollar was tied to gold at officially $35/oz.  In other words, it was worth 20/35 oz = 0.57 oz = about $750 at the current gold price.


Just on that example the dollar is 1/38th of its former value.  Is that a lot yet?  Which world are you moving to?

In reply to by Theosebes Goodfellow

charlewar Sun, 05/06/2018 - 18:11 Permalink

then for those that believe gold & silver are relics, there's buttcoin, for they have complete faith in the casino and really believe something with no intrinsic value is going to make them a fortune. Hello Bernie Madoff.

Son of Captain Nemo Sun, 05/06/2018 - 18:13 Permalink

When this guy (…)...And those involved with him at Goldman Sachs and J.P. Morgan find themselves in a house dress doing time in a maximum security Turkish prison to be ass raped by every Turkish prison guard and inmate DAILY... Or... At the bottom of a 100 story building with multiple nails in their head(s)...


PhilofOz Sun, 05/06/2018 - 18:21 Permalink

I sit one of my one ounce gold coins against the same value of silver coins, around 75 silver coins. Now take away the current ratio of above ground silver as compared to gold, or the percentage of silver being mined now as compared to gold.... move 60 silver coins to one side, they are free! Now the ratio is around 15 to one. Chop out 5% max of the gold coin that might be getting used up in industry that will not be recoverable, and then from those remaining fifteen silver coins, take away probably five that are being chewed up in industries in such minute amounts in circuit boards or whatever that will never be recoverable and add them to the other 60. On one side is now a one ounce gold coin with a nick taken out of it and ten silver coins! On the other side is my free haul.... 65 one ounce silver coins I should not have, more or less!

Conax Sun, 05/06/2018 - 18:30 Permalink

To sum up, gold’s technicals are improving and silver’s are so positive that you have to wonder if there’s a catch, though what that would be isn’t obvious.

What's the catch?

The catch is the bullion bankers and the regulators, with the schmoozing coverage of the financial press.

Silver currently has a potential moonshot building beneath it, but it all depends on the actions of the usual suspects.  That's the catch.

snblitz Sun, 05/06/2018 - 18:37 Permalink

The state of California has been seizing my assets lately.  This is the third time they have engaged in this behavior.  I am considered an enemy of the state, not for my comments here, but for writings in other forums.  The first attack was for public comments I backed before the California public utilities commission.  The second was because "they" wanted some of my property for themselves.  I do not yet know what justification they will be using on this latest round.

It is interesting to note that cash kept outside of banks and PMs are both immune to the criminal reach of the state.

What is nice about my cases is they are right out in the open and easy to see.

It is the theft through monetary policy that I really hate.


Silver Savior moman Sun, 05/06/2018 - 18:51 Permalink

There is nothing like buying physical silver at bargain prices. Like taking candy from a baby! I am going to have a big laugh when silver goes to some obscene valuation and everyone wanting to get in but no silver to buy. 

And the whole paper wealth system going to nothing at the same time. The dumb downed ways of the West are going to be very painful. 

In reply to by moman

icm63 Sun, 05/06/2018 - 18:49 Permalink

People do not understand the COT reports. What does it mean when you have a large negative commercial positions.


When a gold commercial (ak a miner) sales is gold on the futures market that creates a FUTURES SHORT in the physical market, the FUTURES LONG is the retailer or manufacture buying the physical gold. So if the miner thinks this is a good time to sell as price are high he has a large FUTURES SHORT position at the COMEX, however if the commercial thinks prices will be higher in 6 months, he may not sell so much, hence a lower COMEX FUTURES SHORT position. My point commercials are sensitive to price, a high price will bring more miner stock on the market, hence more COMEX FUTURES SHORTS on the physical side of the COMEX market.

icm63 HRH of Aquitaine 2.0 Sun, 05/06/2018 - 19:12 Permalink

The COMEX has two markets. A physical and paper market.


Every one understands the paper market, expect higher prices go LONG, expect lower prices go SHORT.

The physical is the inverse of the paper market.

Gold miner (commercial) sees highs prices he SELLs his gold inventory, this is a SHORT on the COMEX physical market..

The retailer buys the physical gold off the miner this is a LONG in the physical market.

In reply to by HRH of Aquitaine 2.0

Edmund Dantes HRH of Aquitaine 2.0 Sun, 05/06/2018 - 20:11 Permalink

Yeah it's all rigged by joooos , no metal ever changes hands on the CRIMEX and thus the COT is irrelevent . the price you see is whatever they want it to be since they are not really trading anything tangible, most miners sell most of their  product to China and Russia who will pay more than the US spot price. China plays along with the phony pricing  so they can accumulate more metal on the cheap. THERE ARE NO SPECS IN THE COMEX  because   there is no product to deliver , it's just a suppressing device  to try and keep the sheep fooled until the dollar goes in the shitter, or WW3 starts

In reply to by HRH of Aquitaine 2.0

Bopper09 Sun, 05/06/2018 - 18:59 Permalink

Both metals will be rising rapidly when the central banks collect enough gold to save their asses when the banking system fails, along with fiat currency.  'Debt jubilee' will be a giant hike in the price of gold to cover their absurd amount of derivatives.

And if you're dumb enough to believe commodity prices aren't manipulated by the banking system / ESF, then do a quick duckduckgo on 'fines for precious metal manipulation', especially the ones where Doosh bank admitted to it, and publicly disclosed the emails on how they were doing it.

Watch the Shanghai prices start to drift higher from the crimex / lbma.  Shanghai is delivery only, no fine print where they give themselves the option to pay in fiat.