WTF Just Happened? Gold And Silver Set-Up To Soar

According to the latest Commitment of Traders Report released Friday and which accounts for Comex trader positioning through Tuesday, August 21, the hedge fund net short position in Comex paper gold futures soared to an all-time high of 89,972 contracts. This represents nearly 9 million ounces of paper gold. It’s more gold than is produced by gold mines in the U.S. annually. As of Thursday, Comex vault operators reported a total of 8.4 million ounces of gold, only 282,000 of which were available for delivery.  In other words, the hedge fund paper gold short position exceeds the total amount of gold in Comex vaults.

Conversely, the Comex banks are taking the other side of the massive hedge fund short bet. Given the history of extreme positioning by the hedge funds and the banks (the banks are normally short paper gold – thus a long position by the banks is considered “extreme”), it’s a safe bet that at some point in the near future gold (and silver) are set to soar. Perhaps the more interesting question would be to ask why the banks have assumed a large long position in gold. What is it that the banks “see” that has them positioned for a big move higher in the precious metals?

Meanwhile, Tesla is the ultimate evidence that no price discovery is not possible in the U.S. stock market. In a market with true price discovery, TSLA would no longer exist. It appears as if Elon Musk was indeed under the influence of illicit psychotropic drugs when he claimed that funding was secured for a going-private transaction.

In this episode of “WTF Just Happened?” we discuss the massive hedge fund paper gold short position plus lift our leg the idea that Tesla will be around in two year (WTF Just Happened is a produced in association with Wall St. For Main Street – Eric Dubin may be reached at  Facebook.com/EricDubin):

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In the next issue of the Short Seller’s Journal I explain why the housing market is headed south quickly, update my homebuilder short ideas and discuss Tesla. You can learn more about this newsletter here:  Short Seller’s Journal information

In the next issue of the Mining Stock Journal, I dissect the latest COT report and update my favorite junior mining stock ideas, including a couple of interesting silver explorations stocks. You can learn more about this here:   Mining Stock Journal information.

6 thoughts on “WTF Just Happened? Gold And Silver Set-Up To Soar

  1. I read articles like this without the financial services, markets, Wall Street, etc. experience or background, i.e. gaps in knowledge.
    But I do know from years of reading, when the commercials have taken a strong short position it turns out they are right. Maybe they make it so, but that’s another discussion. Now they have a strong long position [they are the primary balancing bets against the hedge fund net short position].
    I wouldn’t bet against them now. However the job of these paper/contract markets are to keep G & S in a range. They have to let the prices go up a bit; “artificially” low for a while.
    Until the whole COMEX et al “markets” break down [at least for G & S], there will be no price discovery in them [price in fiat much higher], while real price discovery would drop TESLA and several other stock’s dollar value.

    Comments? I’m trying to learn & understand more. Thanks!

    1. Hi David,

      Back then silver was the easy money. Gold was not and still is not. See the ”cross of gold” speech William Jennings Bryan and the following turmoil. Besides that, the role of silver in society really changed. From money to mostly an industrial metal (of strategic value, no army can function without it and that is only one example). Ofcourse its history is long and facinating.

      Gold has the power to make or break governments and societies at large. As the saying goes, gold prices the dollar and the dollar prices the rest. This is being undermined globally. It started with the Euro. The pre Euro countries issued their currency off the back of the US treasury. Now off from gold (look at the balance sheet of the ECB). Now there are basically two types of currencies issued. Well three actually, from nothing, the US (petro) dollar, from the US treasury and from a free floating price of gold. Most of the Eurasian landmass (see the heartland theory, who controls that land mass controls the world) now issue their currency from gold (plus Brazil and South Africa)

      At a final thought, all reserve currencies, like the dollar now, had a lifespan of 80-120 years because of the contradictions it creates. It cannot fullfill its role. See the Triffin Dilemma for this. The upcoming monetary reset will have to reset the concept of money. If not, we go into another 80-120 year cycle and I dont think humanity can survive that.

      I hope this helps to give you some food for thought.

      Regards,
      Hugo

  2. Did you read this….the arsonist becomes the fire fighter?

    Steve Mnuchin, Lloyd Blankfein, and Milchael Milken all gathered in the Hamptons to try to save the world.

    Milken, 72, said he’s been working on the idea of the center for 53 years. It will be located on Pennsylvania Avenue, across from Treasury and diagonal from the White House, in former bank buildings he purchased before the 2016 election.

    As for whether President Trump will give Milken a pardon, neither Milken or Mnuchin, who’s reportedly been pushing for it, would comment, though Mnuchin expressed admiration for the man. “He’s beyond remarkable,” Mnuchin said. “His focus on not only prostate cancer, but what he’s done to focus on all the critical issues affecting our world, is really extraordinary.”

    See also: Trump insiders are said to seek pardon for Milken

    Pollster Frank Luntz didn’t mince words when he mused on the legacy of the man who built the junk bond business before going to prison for 22 months and being barred from the securities business, after which he has devoted much of his time to his institute and cancer foundation.

    “Ask me, who’s going to cure cancer? Ask me who’s going to save capitalism?” Luntz said. “Mike Milken. He was a victim of the system and now he is the savior.”

    Luntz’s take on a pardon for Milken? “I think he’s on his way to sainthood, which is hard to get if you’re Jewish.”

    https://www.bloomberg.com/news/articles/2018-08-27/milken-mnuchin-in-the-hamptons-with-blankfein-to-fix-the-world

  3. In short term however I think we should observe developing countries , because they in trouble. They took big loans , assuming that maybe US$ will collapse and now they in trouble. If you can’t service your debt , then you are forced to sell anything , including Gold , like they did in Venezuela. The next few months is going to be bad for gold I think.
    In long term however gold will go up anyway.

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