The following chart is courtesy of Nick Laird and it depicts the Days of World Production to Cover Short Positions that the four and eight largest traders hold short for each Comex-traded commodity. Note that the four precious metals have the largest total short positions…and that the 4 largest traders/bullion banks hold the bulk of them.
Is this the week that the metals reverse direction? Sinclair did say he believed $1,630 was a bottom that should hold. We will know soon enough. His more significant timeline is still 60-days down the road. He expects the Fed to announce QE3 when the economy shows signs of slowing down, by June. Better have your gold in hand by then, or you may be a step behind, and find yourself chasing the price UP for the rest of the year.
After dinner Sunday evening, I checked the market to see, “What’s cookin’ overseas?” It’s 10:20 and gold is UP $7.00. The dollar is up, so are silver, platinum and palladium. It looks like the Asians are moving back into commodities again – in anticipation of QE3 (due to Thursday’s poor jobs report). One day they bail out on Fed comments of no QE, the next they jump back in after they thought about it and decided the Fed is full of b.s.
The gold and silver market is now controlled by short-term decisions made by algorithms and moving averages, without the slightest regard for the fundamentals. QE to infinity, printing money (dollars) to buy bonds and hold back interest rates is terminal for the dollar, but one word from Bernanke that the Fed is not ready to continue with QE, even though it is a bald faced lie, and the markets tank. The “paper” market, the Comex, is controlling the price of gold and silver – UNTIL the physical market (in the Far East) chimes in and takes enough metal off the market at the lower price to levitate the prices. Remember, China and India are the two biggest buyers of physical gold. It happens over and over but the result is always the same – two steps forward, one step back. Those of you who still don’t see this, and are waiting for the bottom to fall out of the prices will be shocked when gold finishes the year at a new all-time high. I say, you will see $2,000 before you see $1,400 gold. In fact you will never see $1,400 gold again. Should I be proven wrong (unlikely) I will mortgage the house and buy every ounce I can get my hands on.
If any of you are still confused what my viewpoint toward manipulation or no manipulation is, the most important thing to understand is that it makes NO difference which camp is correct – gold will go through the roof either way, and silver too. Even Trader David R is convinced that is the case. But that said, I have been in the “market manipulation” camp for the last decade and in spite of Trader David R’s comments, I have seen nothing to change my mind. But his view is valid, and we do “try” and maintain some semblance of objectivity over here, in Minneapolis (and Miami). Less so in Denver.
If you want to start a fight, just start a conversation with a stranger about Obama (pro or con), religion or conspiracy and market manipulation. We do not want any fights here. We are trying to educate you, not indoctrinate you. We do publish Ranting Andy’s comments every day and they are completely one-sided, but probably correct. I have not seen any evidence to refute his excellent presentations. Trader David R disagrees, and he really has no ax to grind, but it is very hard for Wall Street traders to accept Andy’s views. And it is even harder for Andy to accept David R’s views. That’s life. Chocolate or vanilla, take your pick.