The past weekly COT report showed commercial traders increased their short position of gold futures by a whopping > 30,000 contracts! Also the January FOMC meeting is coming, too. Cartel might hit gold price hard next week, IMHO.
The situation in Greece and Euro might wipe out those shorts. Money could be flowing into gold. The bears can come out but I doubt they would be strong enough. We shall see!
It's all looking good except the commercial shorts.. and looking at the charts... this is the equivalent of trying to throw yourself under a bus to stop it.. ineffective! 1for1
Never under-estimate the strength of commercial traders. In the past two years, they have succeeded to knock down gold price; almost in every occasion. When everyone believes this time will be different, usually ..............................................
Why are you assuming that they all of the sudden need to hedge? The prosperous ones in the gold trade are continually hedged. The rest are called bankrupt, Hans Tulving, etc.
The longs on the futures market do the very same for the very same reason. They hedge, against speculators, and their hedge changed the price too. Think of all the bullion dealers worldwide that have to replenish their stock. They place the orders, and take futures market long positions to lock in the net price they will end up paying. If the price would have been driven up by speculators in meantime, they will pay more, but their long positions will have accumulated the difference so that their net price is the same. Think of all the bullion dealers worldwide that see speculators back at their stores to sell their gold back to the dealer. They will take short positions with their increasing stock, so that if speculators would drive the price further down, they will have accumulated the difference they will resell the gold again at. And since the futures contract prices get arbitrated, the spot price will be driven in their direction, closest month first, meaning that if speculators drive the gold price 1 dollar up, the futures market hedgers will make that 2 dollars, and the next speculator will have to pay that extra dollar. That's where the accumulated dollars on the futures accounts find their first origin. The futures market is simply a place to hedge against speculators. It's one massive counterposition.
Eventually the bears will grow horns. Gold is going up in so many currencies, the dip that's coming might be one of the very last dips before it takes of to Mars.
COT report for the week showed that commercial traders continued to increase their short position on gold, significantly (+24k contracts). The short/long ratio is close to 3:1 now; which usually signaled a price top in the past few years. JM2C
is there anywhere you can watch live contact levels? I'd be very interested to watch the price change with the open contacts. There's obviously some real vigor in the market if shorts are piling on but the price is recovering. At some point some of them are going to capitulate and if we see $1300 I'm sure plenty of them will close out. Every one that loses it's nerve and covers the short wipes out one short that trying to stick it out. One bad news story early next week is all we need, the geeks are helping but that's old news. If there's some shocking news out of Russia or one really bad day in us equities we could see enough movement to push the shorts out of the market. A correction in the dollar would do the trick as well. In reading everywhere that it's overbought and due for "a healthy correction". 5% loss in the dollar index would go a long way towards pushing a lot of the shorts out.
Yes, the futures market cartels total position size, the amount stock they hedge against speculators, is a fairly accurate 3 months term prediction basis. Though, they didn't hit today. They hit when they take the position, and fix the price they gonna pay or receive after the period, a price that includes their planned profit. It requires speculators to stack 'on after they took the position. I so far refused. Waiting till they dumped the positions again. To buy silver.
That's why I refused to buy either. Instead, I shorted GLD when gold was hovering around 1290-1300. I have been waiting for Cartel to dump; I know they will eventually and they did Don't complain about Cartel manipulation of precious metal market; I say take advantage of them.
