The above chart is from 321Gold. It matches the CTFC Report.
Jump in Shorts
Last Week = (101,695 + 41,554) minus the jump (13,396 + 11,449) = 118,404
Increase in shorts = (13,396 + 11,449) = 24,845
Percentage Increase = 24,645 / 118,404 = 20.98%
Long Liquidation
Frequently one hears comments like “commercial reduced their short positions”.
While arguably accurate, it conveys the wrong idea.
Commercial traders, except for producers who do sell short, simply take the opposite side of the trade. The commercial traders are not net short, they hedge.
Thus it is a more accurate summation to call this for what it is: Long liquidation. Gold longs are increasingly unconvinced and are throwing in the towel.
Like Hickey, I believe speculators throwing in the towel and betting against gold is ultimately bullish.
Hickey notes “The shorts have to cover.” It’s important to note that applies to speculators, not producers or hedgers.
Mike “Mish” Shedlock
I think the recent weakness is due to higher interest rates propping up USD, but this is temporary. There’s a limit to how high interest rates can go before causing a recession and I think we’re close to that limit.
Time for Max Keiser to start a new promo “Crash JP Morgan, Buy gold!”
This article is exactly right. The commercials simply hold the opposite position to the speculators, whatever that may be, and then hedge to eliminate risk.
Oh oh don’t admit that or else you’ll have the officials at your door. Oh wait Obama isn’t president anymore. BTW 22 cal is supposed to be one of those rounds tradable and its cheap again now that the gun salesman of the century has left office.
hmk – Toilet paper and soap are good things to horde for future barter. While I don’t think it will get that bad in the US I do buy a box of ammo each month. I don’t buy just the most popular calibers. My thinking is the lesser popular calibers may go for a better price should the shtf.
The real problem is the foreign country banks that made the dollar loans to their domestic markets. They are having dollar funding problems. Only their central banks can help them by trying to acquire USD. That will drive the dollar higher. The ensuing flow of dollars out of the US will create funding pressure here. I don’t see US Banks having much of a problem because of the FRB being able to provide liquidity to our banks. More the problem is economic slowdown as banks will not have the ability to lend as much.
One thing I am not so sure of is that as a store of value or price appreciation, will they actually be useful during a crisis. Gold and silver are not being used as currency in
places like Venezuela. Currently in a shtf situation of which Venezuela is the perfect example they are bartering with goods like toilet paper and soap or services.
I was waiting for it to go down to the 900-1000 range. Just gonna wait and see this time.
@ Bam_Man gold priced in other currencies…
Gold is pretty much inversely correlated to USD.
Gold gets liquidated by countries when they need USD. The buying of USD bids up its price and the selling of gold bids down the price of gold.
hmk re theory
Gold is at multi-year highs priced in many currencies. (Turkish Lira, Argentine Peso, Brazilian Rial, Indonesian Rupiah, Iranian Rial, Mexican Peso
– among others).
I think the theory is that as rates go up the dollar will strengthen and thus gold declines in dollar terms. In the 70s gold went up as rates went up so who knows. During a financial crisis all assets most likely will decline.
Is it proven that gold should decline in price because rates are going up?
No major banking crises in the immediate future, then?
When the margin calls flood in, everything (including the good stuff) gets liquidated.