They Better Pray There Is No Short Squeeze... http://www.zerohedge.com/news/2013-05-22/they-better-pray-there-no-short-squeeze Contrarian bit cheese
Nikkei dropped 7.3 percent today...risk off? PM's to da moon lol http://www.bloomberg.com/quote/NKY:IND
http://www.zerohedge.com/news/2013-05-24/despite-promises-japanese-market-chaos-continues I'm thinking... liquidity event to push gold to ultimate low of 1260ish ~28th-30th
Hi Dan, It's the opposite way around actually. Lots of short selling means they are betting on gold or whatever asset/equity class being a lower price at a certain point in time. There is currently quite a big bet on gold going lower based on the amount of short selling going on, but although its an indication of direction and sentiment, it's no guarantee it will happen. If there were a guarantee, the market would move immediately of course!, and there have been many instances of experienced traders losing big on short selling. The way I see it, is that sentiment is what drives the market, and right now the sentiment is pretty poor, so there is a chance it could go lower. Having said that, sentiments not been great for 18 months, so you might also argue the worst of the correction is over. I have taken the opportunity to buy a small amount, mainly as I consider the price low, but also as a hedge against the much bigger positions I have in other investments currently doing very well, mainly equities.
Thank you very much richo. I thought that was the correct way round but it was the big bet on pm's going down that got me confused. Thanks again for the free lesson
I find this interesting but I'm finding it hard to understand the exact ramifications. Could someone please explain in laymans terms what this means if the is a big up/down move in the price of gold?
such a large short position will eventually have to be closed at some stage unless gold is to go to zero so closing those shorts should support/raise the price?
My view of shorting (no matter what it is) is that on average you are pissing against the wind. Why? Because over time, nearly anything of any value rises in price. So to short means you are going against the long term trend of pretty much every asset on earth. Yes I know if you hold a 1 month or 1 week short its different BUT you are still always betting against the relentless march of prices upwards.
wow some crazy shit going down... can see how things could get out of hand in either direction Seems they want it kept under 1400
Forgive my ignorance and correct me if I'm wrong. This graph looks too simple, I must be reading it wrong. Does this mean that someone with enough money or organisations in cahoots etc could... Take massive short position - affecting sentiment (wow that much money going short, its sure to fall some one knows something.... Quick sell your gold) Buy gold at discounted price. Take additional massive short position, while selling (some) at the "top" affecting sentiment and price back down to cover previous short position with both sides positions. Would this work? How much money would you actually need to throw at it to move spot this much? And could central banks use QE money they have sitting as excess reserves for these kinds of missions? Please someone correct me? Surely it cant be that simple
Simple possible urban legend goes that JPM was getting his shoes shined by a shoeshine boy who offered him some tips on the stock market at the time. JPM figured that if the shoe shine boy was in then almost everyone was in and therefore there was no greater fool to sell to. Same goes here. The ammunition to drive it lower is already been fired but possible ammunition to drive it higher is still in the gun. Does this mean it can't go lower? Hell no
