Is Gold Now Set-Up For A Move Higher?

There’s just too many loud voices – plus self-promoting self-aggrandizers like Harry Dent – screaming for $800 gold.  Last time Goldman came out with an $800 gold target, gold ran from $1100 up to $1400.    Will these carnival barkers be right this time around?  I don’t know.  As Bernanke famously said, the Fed (banks) have new technology that enables them to create electronic dollars (Comex paper contracts) in unlimited quantities in order to direct the market in the direction of their command.

Of course, we all are left wondering why Bernanke ended his Fed chairmanship a few terms earlier than he needed to and decided to not stick around to face the consequences of his actions while he was pressing the print button on his keypad.

But I digress.  As for $800 gold?  It might have to wait.  The bullion banks have quietly shifted their trading book to a net long position.   And, in wash-rinse-repeat fashion, the hedge funds and the small retail traders have taking the other side of this and have gone net short Comex gold – significantly net short Comex gold:  (click image to enlarge)

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It is very rare for the hedge funds to run a net short position. Since the CFCT/CME began disaggregating the COT report into more trading “buckets,” the hedge funds have only been net short on on two occassions – now and in July/August earlier this year.  Gold staged an 11% move in August.

In the close to 15 years that I’ve been involved in the precious metals markets, when the bullion banks take extreme positions – either long or short – remarkably the market always seems to move in their favor.  Funny thing – that – because the law of averages would suggest a remote probability of this event occurring with 100% certainty.  We know the CFTC has never seemed to be able to find any indications of malfeasance or market manipulation – wink, wink.

Currently the hedge funds have their second largest net short position in the history of COT reporting.  Back in early August the net short hit a little over 14k contracts.   This explains the erratic trading in gold this past few weeks.  I would also be willing to wager that the hedge funds will show their largest net short position ever when the COT report is released.

Oh ya.  There was one other time when the hedge funds – labelled as “Large Speculators” prior to 2006 – were net short, and it was only for a couple days:   early 2000 right before the bull market in gold was launched.

6 thoughts on “Is Gold Now Set-Up For A Move Higher?

  1. It won’t move up higher until the leverage of hundreds of owners per ounce is brought under control ….. I’m expecting the leverage to go 400-to-1 in the not too distant future …. when the Gold companies and people like Sprott, Hathway, Barisheff, etc, are just going to stand around and do nothing while the COMEX leverages to infinity – by doing nothing they are consenting to the COMEX crimes.

  2. The current situation reminds me so much of what happened
    back in the nineteen seventies. Gold had run up to about
    two hundred bucks and then corrected back down close
    to one hundred and stayed depressed for a couple years.
    I had the same feeling then as I do now and then it started to
    move up slowly but steadily with the occasional small
    correction. Eventually after a couple years it got to the blow
    off stage and then went up a couple hundred bucks in a very
    short period of time. At that time I was working in mining
    exploration in Canada’s north country and I’ll never
    forget the many junior companies that I did contract work
    for that promoted their property and their share price zoomed
    from pennies to many multiples of ten dollars. It was hard
    to believe because I knew the properties didn’t have any
    ore body although they may have had a small au showing. The
    only thing that mattered was the company needed gold in
    their company name and if they could produce some teasing
    drill results the share price went ballistic. It truly was a mania
    and I fully expect we are in for something similar but better
    this time around. Yes I believe gold is poised to take off and
    we are in for a wonderful ride. I say buckle in folks and hang
    on tight because the fun is about to begin.

  3. Dave it looks like 11-24-15 was the “Go Date” for 911 deux as Marshall Swing said. I can’t think of a bigger green light than what the criminals who run our Government gave to Turkey – shoot down a Russian war plane which was not in their air space. The repercussions felt from this shoot down are unimaginable. This does not even take into account all the ISIS thugs being flown into our country – Again by the same criminals who have captured our Government. Therefore, ISIS will be able to make good on their “Terrorist” attacks upon our country – Compliments of the coordinated support of the criminals who control our Government. Other than that, Happy Holidays and good hunting when these imported ISIS thugs by the U.S. Gov – Make their move.

    1. Based on several observations and corroborating stories from people all over the country, I think our economy hit a serious wall in August. The final collapse may be in motion. I’ve said for years that the U.S. Govt would foment a world war to cover up the economic collapse AND to avoid having to reveal the truth about the status of Fed gold and Fed custodial gold

  4. May indeed bounce it appears. But it will AT LEAST retest the lows of this move before any substantive upleg resumes. This is not over yet, folks.

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