Tag Archives: short squeeze

The Action In The Metals Is Getting Interesting

That big spike up today that Zerohedge is saying is $450mm worth of paper gold occurred exactly at 8:15 a.m. EST, 5 mins before the Comex gold floor opens.  Someone either wanted to cover a big short or, less likely, a big fund decided to get very long.  I couldn’t see any news or event-related triggers. But the tape-action reflects a fear-driven trade if it was short-covering OR probably some sort of inside view of information not yet public if it was a trade to establish a long.

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TF Metals report  (link) that GATA published yesterday contained excellent sleuthing by Mr. Ferguson.  When I saw that JPM had become quite net long gold futures several months ago, my first impulsive thought was that they were getting long in order to be able to turnaround and dump big quantities of contracts to control the Comex price at some point.  TF Metals illustrates this is likely what occurred with the published data as evidence. (CFTC Bank Participation Report).

HOWEVER, it occurred to me that – perhaps – IF JPM has to resort to building up long positions in paper gold to enable the banks to turn around and dump the contracts in order to execute effectively its Fed-mandated policy goal of capping the price of gold, is this yet another indication that the bullion banks are running out of physical supply to throw at the market?

In my opinion, it is.

Is Silver Set Up For A Huge Short Squeeze?

I’ve been going back and forth with GATA’s Bill “Midas” Murphy (Lemetropole Cafe Midas Report) about the significance of the unusually high silver futures open interest on the Comex right now.

Historically, a high open interest in silver is associated with short term market tops because the hedge funds have gotten negligently long silver futures and the market manipulating big banks have taken the other side with extreme-sized short positions.

This time around the situation is the exact the opposite.  The hedge funds are now historically short silver futures and the banks and silver producers (mining companies who hedge production using futures) are either net long silver or are sitting with historically low hedge positions.

I wrote an article for Seeking Alpha detailing the data showing the set-up as described and explaining why silver may be set up for a big short-squeeze move higher:  Is Silver Set Up For A Short Squeeze?

There’s also a couple ideas for taking advantage of the set up, plus one of my research ideas – Almaden Minerals (report linked at the top with technical analysis from DenaliGuide) – has quite a bit of silver in its Ixtaca gold-silver project.