I normally don’t write much at all about the “short term” in the metals markets because it’s a mug’s game. If you are correct no one remembers and if you are wrong it will surely get thrown in your face. I have said twice over the last two weeks that my gut feel tells me we are making a bottom (and yes I know, my “gut” means nothing… especially when the markets are as rigged as they are). I have traded and been involved in gold for 15 years (really 30 but the last 15 in a concentrated way after jumping all in).
We have a dichotomy where the paper markets are selling while the physical buyers are stepping up their purchases. This is evidenced by hedge funds exiting and actually short the gold market, the COT numbers (if they are to be believed) skewed uber-bearish (bullish) and the ETFs shrinking in liquidation mode (is this where some of the physical is coming from?). On the other hand we have the little guy buying coin in record numbers and central banks purchasing tonnage. We also have the dichotomy in the silver market particularly where physical is trading at a premium to spot and has only happened to a larger degree back in 2008.
By the time you read this I may have egg on my face but here is a thought: The payroll numbers came out this morning showing strength. I don’t see it, but that’s what they say. Gold and silver “reacted” negatively (gold down $18 and silver down 60 cents). I think the possibility of a reversal exists (VERY rare in the precious metals) and should it occur the shorts will be placed in panic mode (just checking now and the metals are firming). Should we get a move into positive territory by the close I believe it will confirm bottom and signal a change in direction (finally!). I normally don’t call any particular day as “important” but I think today is. Let’s see what happens today as the market posture is set up for a very big BIG rally, it has to start from somewhere.