Short Squeeze Coming in Gold?

s4ny

Lots of talk yesterday and today about big banks playing games with commodity prices. Soft drink and beer
companies are complaining to Congress about Goldman Sachs and JP Morgan controlling physical aluminum in
warehouses and moving the metal around to delay delivery.

Now, the subject has moved to gold where at one point on Tuesday spot gold was trading at a higher
price than the Aug futures contract indicating that there could be a physical shortage.

A UBS analyst has theorized that gold may be getting moved around because it has been loaned out and not
available for delivery. He hears rumors of a shortage of physical gold and states that the next 5 days will be key.

mrpaseo

The next 6-9 months will be interesting to see.

mhammerman

Aluminum storage and the banksters

Make of this what you will...

Edited to add that the discussion regarding aluminum is near the middle of the article.

cohodk

No. Gold is not in backwardation.

LochNESS

<< <i>No. Gold is not in backwardation. >>


That's a new word for me

CaptHenway

They can start any time now.......

derryb

paper futures are being seen as more of a risk as the reality of lack of physical backing sinks in and warehouse supplies dwindle rapidly. This is why the futures price is down. Until the fractional selling of paper metal comes to its horrible end look for prices of physical to be restrained. The bottom threshold on prices is what it costs to pull the metal from the ground and process it. We are not much higher than that now so the downside appears to be minimal. Look for sideways pricing until the paper market implodes. Paper promises are nothing short of debt. Too much debt always implodes. We saw that movie in 2009.

MacCrimmon

The instos started pounding GLD/DUST at 1252 EDT when SS were triggered......Au off $32 as of now.....DUST up 14%+

derryb

<< <i>No. Gold is not in backwardation. >>



My hero MISH agrees:

Gold Backwardation Conspiracy Nonsense

LochNESS

<< <i>The bottom threshold on prices is what it costs to pull the metal from the ground and process it. We are not much higher than that now so the downside appears to be minimal. >>


Sounds like you think now is a great time to buy because the spot price won't drop much farther, and all those who believe $8 Ag and $1200 Au is around the corner are sillyheads?

derryb

<< <i>

<< <i>The bottom threshold on prices is what it costs to pull the metal from the ground and process it. We are not much higher than that now so the downside appears to be minimal. >>


Sounds like you think now is a great time to buy because the spot price won't drop much farther, and all those who believe $8 Ag and $1200 Au is around the corner are sillyheads? >>




<< <i>"downside appears to be minimal" >>

roadrunner

Just got the "long" squeeze today in gold. Nicely timed with Monday's full moon, dollar due for a monthly bottom, and Options Expiration for PM's arriving on Thursday.
Treasury auctions Tuesday-Thursday completed the usual negative setup. Bulls were lucky they got a strong Tuesday as well.

I never quite understood the backwardation thing. But now I just realize it's hardly ever, ever true. Cohodk has hammered that point home over the past few years.

cohodk

I've only seen backwardation twice. In 2008 with oil and 2011 with silver. Both times backwardation occurred AFTER prices had already run dramatically and resulted in blowoff tops. It doesnt happen in the middle of downtrends or sideways patterns.

If/when backwardation does occur, you better believe I will be very long, however with a quick exit strategy, as this only lasts for a few weeks, maybe up to 2 months. Then just as much $$$ can be made on the way down. Both oil and silver subsequently lost 2/3rds their value.

johnny9434

<< <i>

<< <i>No. Gold is not in backwardation. >>


That's a new word for me >>

lmao, yeah, for me to.

vpr

1. Just another unlikely theory. There is plenty of supply of gold. Besides any move higher will be limited. If prices go up, even more supply will come onto the market.

2. Don't for even a second believe that just because we're at or slightly above cost of production, prices will have to rise. Shutting down production costs money and so does reopening mines. There are other factors that go into a company's decision to shut mines. Throughout history, many commodities have spent years below their cost of production. Not sure why this one is any different. Gold has gone up too much for too long. The correction we have had so far is not enough, IMO. I'm not a buyer at these levels. We will very likely go under $900. I say this because $1000 is a psychologically significant number. And typically these things get taken out by a nice margin before rebounds. Everyone will be eyeing that number, but I think we will go lower.

roadrunner

Gold will go as low as the fiat/debt/bond fiasco regime will allow it to. There are rumblings that Deutsche bank has some huge issues. If and when the cracks can't be stuffed
with any more short gold contracts the price of gold will continue back up. It matters little whether the bottom is at $1180, $1100, $1000, or $900. It will turn when the time is right, not
when the price is right.

derryb

<< <i>There are rumblings that Deutsche bank has some huge issues. >>


Add Citibank to that list.

cohodk

Andrew obviously has no concept of backwardation. Perhaps he is the shill?

derryb

The short squeeze in progress.

rawteam1

<< <i>The short squeeze in progress. >>



never seen a .5% short squeeze, must be little leagues...

derryb

<< <i>

<< <i>The short squeeze in progress. >>



never seen a .5% short squeeze, must be little leagues... >>


They all start at 0%

derryb

<< <i>I don't claim to understand how these futures markets work entirely, but offering this for thought....

Two weeks ago Silver was ~$19.50/oz., now ~$23.25/oz. Futures contracts are leveraged - say you need to post 12% margin of contract value (8:1 "leverage").... With that 19% gain in the last two weeks, those "shorts" just lost 150% of their margin - all they had posted, and then some. That's a "squeeze", and I'm glad that is NOT me holding those short contracts!...

In other words, it seems the "squeeze" started two weeks ago?... >>


yepper, and the cool thing is that they are being primarily squeezed by their shorting partner JPM who went long.

roadrunner

Looks to me like a long squeeze is in progress....right into the middle of next week.

derryb

<< <i>Looks to me like a long squeeze is in progress....right into the middle of next week. >>


not a squeeze, just a pinch

roadrunner

The banks/producers/merchants are heavily short silver, but, long gold. The swap dealers, the other half of the commercials have it just the other way around.
The bank participation report shows the US banks very heavy short silver. That would tend to imply JPM is still on the short side of silver. If they aren't, then
1 or 2 out of the other 3 large reporting US banks are heavily short. The 3 or less reporting banks carry a net 19,000 short silver future's contracts (ie 7-1 short to long ratio).
I guess it's theoretically possible for JPM to carry a non-short BPR position yet maintain a large long position through their clients/friends/or prop trading.

cohodk

<< <i>The banks/producers/merchants are heavily short silver, but, long gold. The swap dealers, the other half of the commercials have it just the other way around.
The bank participation report shows the US banks very heavy short silver. That would tend to imply JPM is still on the short side of silver. If they aren't, then
1 or 2 out of the other 3 large reporting US banks are heavily short. The 3 or less reporting banks carry a net 19,000 short silver future's contracts (ie 7-1 short to long ratio).
I guess it's theoretically possible for JPM to carry a non-short BPR position yet maintain a large long position through their clients/friends/or prop trading. >>



Better prices will be forthcoming.

CaptHenway

Something just got caught in the wringer!

derryb

<< <i>Something just got caught in the wringer! >>


Wasn't USLV.

roadrunner

<< <i>[Better prices will be forthcoming. >>




Depends on what side of the fence you're on. Today was a "better price" for the bulls. Bears have to wait for another day.