Better yet, give me both.
I will post anything that is factually correct or the opinions are
logical. That is, if it might be valuable to my readers. The best of all
worlds would be where logical opinions are backed up with facts. The worst of
all worlds is when a piece is filled with disinformation and utterly lacking
in any logic. There are a lot of those around.
I'm like all readers; I will read through a piece until I gag. Then I stop
and find something else to peruse. Today I opened my email and saw a piece
talking about the Comex open interest. I managed to make it about a third of
a way into the first sentence before I grabbed a big spoon and headed to the
toilet for a little secession of "gag me with a spoon." The author
started his piece with some rambling about defending long held short
positions by the "Comex Banks."
I hate it when people simply invent new concepts that are utterly
irrational. Comex is an exchange, not a bank. How could anyone confuse Comex
with a bank? What the hell is a "Comex Bank?"
Did this guy just make this up or is he so ignorant of how commodity
exchanges work that he wants to share his ignorance with the world? It got a
whole lot worse from there.
One of the earliest writers we posted on 321gold.com is Steve Saville of The
Speculative Investor. The guy is simply brilliant and well worth the cost
of $240 a year. For that you get two commentaries a week filled with good and
valuable information about markets in general, the dollar, gold and specific
recommendations. Like Bob Hoye and Adam Hamilton, Steve pretty much gets it
right and we are always pleased to post him. Not that we do it very often
because he is really lazy and dilatory in sending us pieces, hint, hint.
He does have free blog where he comments on subjects such as A critical juncture for gold and Making
stuff up, two of his latest free blog entries. You need to bookmark the free blog and go
there on a regular basis.
Steve Saville wrote an interesting blurb on the COTs and what really happens
a few weeks back. What goes on is almost exactly the opposite of what our
makeup artist said. You can read how the COTs really work from Steve's vantage point here.
Here is how the COTs work from my perspective. Contrary to our fledgling
GURU and pending expert, it is not the commercials that initiate new futures
contracts; it is usually the small speculators. The banks pretty much don't
bother trading metals futures, contrary to popular view. They make a market
for the commercials. The interest rates derivatives are 100 times bigger than
the gold market, why would banks give a damn about such a tiny market? It's
not even chump change; it's far too small to be chump change.
We know that small speculators are trend followers. They want to buy at
tops and sell at bottoms. The more gold goes up, the more excited they get.
Likewise, the more gold goes down, the more negative they get. So it is
perfectly natural that when you approach a market top both the number of
contracts outstanding and the number of small speculator shorts is high, many
times even a new high. That's where we are right now, a new record high in the
number of outstanding contracts in gold.
Commodities, unlike the stock market, are a zero sum game. For every
contract, there is one buyer and one seller. That's how we know there is no
such thing as a naked short because it being a zero sum game, if you had
naked shorts, you would also have to have naked longs. No one has plucked
that concept out of thin air the way they did naked shorts.
Small speculators are the weakest of weak hands. As markets climb for
month after month, they start getting frothy at the mouth and want to climb
onto the train at the very last possible stop. They also are the first to
bail out.
Contrary to the article filled to the brim with nonsense, the banks by and
large don't trade for their own account unless they are clipping cents off of
trades by hedging futures against cash positions. The banks are obviously
strong hands, as are the commercials.
Why would a gold producer panic at the possibility of higher prices for
the commodity they trade? They may be short gold and from the perspective of
the person on the long side, they are losing money compared to the long but
all the rest of their gold is going up in value. That's why the commercials
cannot and never will panic. They are the commercials; higher prices are
always in their best interest.
That's not the same issue as happened with Barrick ten years ago. Barrick
hedged gold at the very lowest prices in memory and did cover but that was a
function of its poor financial planning. Commercials typically respond to
demand from small speculators on both the long and short side. They respond
to demand, they don't create it.
The weak hands are rushing into gold and silver now. We know that because
of the size of their small speculators long position. They will be the first
to panic in a correction that we all know will come one day soon.
It's popular to believe that the banks want to manage and control the
paper price of gold. If you want to get people to sign up for your website
and pay you the big bucks, you feed them this sort of nonsense and rubbish.
When it comes to gold and banks managing the price, frankly my dear, they
don't give a damn.
Nobody Knows Anything is available on Amazon in either Kindle version for $3.99 or in paperback for $9.99
Bob and Barb Moriarty brought 321gold.com
to the Internet almost 14 years ago. They later added 321energy.com to
cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both
sites feature articles, editorial opinions, pricing figures and updates on
current events affecting both sectors. Previously, Moriarty was a Marine F-4B
and O-1 pilot with more than 820 missions in Vietnam. He holds 14
international aviation records.
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