Short Squeeze Coming in Gold?
s4ny
Posts: 1,569 ✭✭✭
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.
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.
0
Comments
Make of this what you will...
Edited to add that the discussion regarding aluminum is near the middle of the article.
Knowledge is the enemy of fear
<< <i>No. Gold is not in backwardation. >>
That's a new word for me
Amat Colligendo Focum
Top 10 • FOR SALE
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>No. Gold is not in backwardation. >>
My hero MISH agrees:
Gold Backwardation Conspiracy Nonsense
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <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?
Amat Colligendo Focum
Top 10 • FOR SALE
<< <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" >>
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
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.
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.
Knowledge is the enemy of fear
<< <i>
<< <i>No. Gold is not in backwardation. >>
That's a new word for me
lmao, yeah, for me to.
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.
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.
<< <i>There are rumblings that Deutsche bank has some huge issues. >>
Add Citibank to that list.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Knowledge is the enemy of fear
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>The short squeeze in progress. >>
never seen a .5% short squeeze, must be little leagues...
<< <i>
<< <i>The short squeeze in progress. >>
never seen a .5% short squeeze, must be little leagues... >>
They all start at 0%
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <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.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Looks to me like a long squeeze is in progress....right into the middle of next week. >>
not a squeeze, just a pinch
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
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.
<< <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.
Knowledge is the enemy of fear
<< <i>Something just got caught in the wringer! >>
Wasn't USLV.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <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.