Gold and silver are acting differently right now. Usually when the
open interest in the paper gold (Comex) net short of the bullion banks
becomes overweighted, it’s a signal that they are getting ready attack
the price of gold by triggering massive stop-loss selling by the
technically-driven hedge funds.
And through last Tuesday, per the latest COT report, the Comex banks
had piled heavily into the short side, feeding paper shorted to the
hedge funds. And true to form, the market was attacked aggressively this
past week starting Tuesday with the expiration of Comex options.
Interestingly, the banks had to wait until
after the Comex
floor trading closed on Tuesday in order to take advantage of a
thinly-traded electronic “access” market that is open for about another
90 minutes after the Comex closes in order to push down the price of
gold enough to trigger automated hedge fund algo stop-loss selling.
The attacks on the price of gold persisted through Thursday,
resulting in what appears to be a record weekly percentage drop in Comex
gold open interest. But this attack resulted in a shallow price
decline. And if you trace the build-up in the bullion bank short
position over the past couple of weeks, it appears that the banks were
willing to sustain losses on those shorted contracts in order to cover
them. Bill “Midas” Murphy at
Lemetropole Cafe first
pointed this pattern out to me and I confirmed his theory by tracing
out the rise in the commercial short interest with the movement in the
price of gold.
At the same time, there has been a massive amount of silver – as
reported – moving in and out of the “registered” accounts at the Comex
silver vaults. The silver in the “registered” account is the silver
designated to be available for delivery. On the last two days of this
past week, for instance, nearly 30% of the silver held in the registered
account was moved into the “eligible” account. The “eligible” account
is the account in which silver is allegedly “safekept” for the owner of
that silver.
Finally, although the mainstream financial media and the fear porn
oriented alternative media has been making a lot of noise about the
sudden fall-off in the sales of minted bullion coins, I heard a report
from a large bullion dealer who said that, while retail coin sales are
slow, his company has been receiving very large orders from very
connected quite off the radar types purchasing large quantities of
physical silver. The recurring theme from these buyers is a desire to
move money out of electronic fiat currency bank credits and into
privately safe-kept precious metals in bullion form.
Eric Dubin (The News Doctors)
and “Doc” invited me to join them on their weekly Metals and Markets
podcast to discuss the latest developments which point to possibility of
a big surprise move to the upside in gold and silver that is driven by
the physical market:
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Dave Kranzler spent many years working in various Wall Street jobs. After business school, he traded junk bonds for a large bank. He has an MBA from the University of Chicago, with a concentration in accounting and finance, and graduated Oberlin College with majors in Economics and English. Dave has nearly thirty years of experience in studying, researching, analyzing and investing in the financial markets. Currently he co-manages a precious metals and mining stock investment fund in Denver and publishes the Mining Stock and Short Seller Journals. Contact Dave at dkranzler62@gmail.com.
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The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.
