Gold, Silver, Mining Stocks Are A Coiled Spring

Currently gold and silver are behaving in a way that I have not seen since late 2008. The gold open interest on the Comex is near a record high (657,776 on July 11, 2016). The Comex banks continue pile into the short side while the hedge funds pile into the long side. However, every attempt to start a “waterfall” type sell-off is met with buying. Several attempts to take gold below $1400 this week have been thwarted. Silver all of sudden started moving higher manically. Based on the data I see daily, India and China are not participating in the buying. At least overtly. It feels like someone “big” is out “there” accumulating gold.

Phil Kennedy of Kennedy Financial put together a roundtable discussion with Bill Murphy, Dave Collum, Rob Kirby and me to discuss our thoughts on the gold market:

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14 thoughts on “Gold, Silver, Mining Stocks Are A Coiled Spring

  1. “The Comex banks continue pile into the short side while the hedge funds pile into the long side. However, every attempt to start a “waterfall” type sell-off is met with buying.”

    Dave, I’m asking this because I’m learning…what type of buying? What are they buying, more contracts, or demanding physical delivery? There are large gaps in my understanding of what happens on the COMEX.
    Thanks,

  2. Dear David, please have a look at https://harveyorganblog.com/. Huge quantities stand for physical delivery every month. Harvey lists them day by day in an admirable fashion. He shows in great detail how these delivery demands are then mutated into Exchange for Physical contracts. Why? Because there is very little gold and not enough silver at the COMEX. What is called hedge funds is in fact massive demand from investors who buy gold by the ton. For 2018 EFP issuance reached several times annual gold and silver mine production. Why do these buyers accept EFPs instead of the physical metal they bought? I quote from my post of the 9 July:
    “Because the physical delivery of these quantities is impossible. Not even at a much higher price. You can not get hold of 6000 mt of gold if mining supply is at 3000. Therefore central banks have established a rationing book. Like in WW II. Every central bank cartel member gets a ration at the prevailing price. Imagine what would happen if the BOE, the BOJ, the ECB and the US Treasury wanted to buy 1000 mt each, at the same time. The price would go through the roof, nobody would be willing to sell and they would get nothing. Mining companies would stop supplying the market with metal. Instead they would sit on their gold, borrow against it and watch the price jump $100/day. The huge demand queue for gold and silver (this metal is more relevant for industry and private HNW individuals) helps you, dear reader to assess the true demand picture for PM. It is at insane levels but camouflaged to discourage the public from buying it.”

    1. How; what is the mechanism by which industry gets the silver it needs?
      If, as we have geard, industry uses over half of the silver of the silver mined, how & where are they getting it from?
      Does it involve the COMEX at all?

  3. The video clip below shows the growing pressure that finally burst the price control regime of the Cartel. I find it equally remarkable that it is shown on Bloomberg:

    1. This is just technical analysis; showing possibilities. While it is somewhat surprising to see it on TV, close to mainstream media, it does not prove “the price control regime of the cartel” has been burst.
      That conclusion is a non sequitur from that audio/video clip.
      They may be losing their grip, but that clip does not prove they have.

  4. Looks like the Fed will cut 25 basis points at 2:00pm EST on July 31.

    Will the Cabal body slam PMs and take the S&P up?

    Any predictions here? It’s going to be wild for sure as the algo’s go crazy on the wording in the press release too.

    1. Let’s put it this way: they are conscious of what it would mean to trading algos for there to be a strong PM close to the month.
      I read a good explanation of this recently, but the technical analysts out there can explain this better than me.

  5. That was hot discussion.
    In my opinion gold is going much higher , I don’t know why.
    It’s most probably well planned by Masters , they know what is coming and is only another few weeks to go.
    They will go with the flow and They will make a lot money ,same way They did between 2009-2011.
    The Bitcoin is only distraction well planned by Them , only gold is money.

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