Usually I’m loathe to stick out price targets on the markets, especially gold and silver, because of the undeniable market intervention of the Central Banks – market manipulation which is blatant to the point at which it is now denied only by card-carrying idiots.
Gold and silver had a sharp run-up in the last two weeks of 2017. However, the abrupt move in gold was accompanied by a rapid rise in the gold futures open interest on the Comex. The “commercial” – aka “the banks” – net short position in Comex gold futures has increased by 100,000 contracts (from 120 net short to 220k net short) in just four weeks through the most recent COT report. That’s a net paper gold short of 22 million ozs, or 623 tonnes of paper sold short. As of yesterday (Tues, Jan 16), the open interest in gold futures increased another 27,000 contracts, most of which, based on the trend in the COT positions, can be attributed to a continued increase in bank short interest.
To put this paper gold short position in perspective, the Comex reports that its warehouses “safekeep” 9.2 million ounces of gold (this number is unaudited). That’s 11 million ounces less than the bank net short position. However, only 586k ozs of gold are reported to be “registered,” or available for delivery. The ratio of the paper gold short to deliverable gold is 37:1. In other words, each ounce of deliverable gold has been “hypothecated” and re-sold 37 times.
I guess if you are a card-carrying idiot, you have every right to deny that these numbers reflect the flagrant disregard of securities laws by the banks. But of course, the very people appointed to enforce these laws are from law firms that make millions defending the banks’ legal rights to ignore Rule of Law.
On the other hand, offsetting the attempted control of the price of gold using derivatives, the eastern hemisphere demand for physical gold continues to be immense. It looks like, based on SGE gold withdrawals, China as a whole “consumed” over 2,000 tonnes of gold in 2017. India likely imported and smuggled into the country close to or more than 1,000 tonnes. Turkey imported 370 tonnes of gold in 2017. This exceeded the previous record in 2013 by over 22%. I would note that the size of Turkey’s demand was not expected. I don’t have Russia’s import numbers off the top of my head but Russia imported more in 2017 than has been typical.
The point here is that the eastern hemisphere’s demand for gold on an annualized basis is increasing as the price of gold increases. It’s important to know that, on a seasonal basis, imports into China and India tend to slow down in late January through February before picking up again. My hunch is that the paper gold manipulators are looking to hold down the price of gold as much as possible and wait for eastern demand to subside before attacking the price.
This will serve as a catalyst to launch another surge higher in the price of gold driven by physical demand. Demand which might get a boost from the ongoing crash of the cyptocurrencies.
Having said all of that, I believe there’s a good chance that gold will move toward and possibly over $1400 during 2018. This Trump tax cut will negatively impact the Government’s spending deficit by a meaningful amount and the U.S. will be forced to issue well over $1 trillion in Treasury debt this year. Moody’s placed the U.S. Government’s rating on watch for a possible downgrade. During the course of the year I expect to see the dollar index drop below 90, which is a key technical support level. If this occurs, gold will quickly move over $1400.
A portion of the commentary above is an excerpt from the latest Mining Stock Journal.
With demand from Asia continuing to be strong, the dollar continuing to weaken, China taking on less or even dumping US treasuries, $1400 is conservative. I expect gold to take a run at, and possibly overtake its all time high.
As soon as I saw the futures market getting involved with cryptocurrencies, I sold all my bitcoin and 2\3 of my etherium. After seeing how these crooks were suppressing precious metals I knew the cryptocurrencies would be headed south. I think it’s time to make another contribution to GATA. They saved me thousands.
” I believe there’s a good chance that gold will move toward and possibly over $1400 during 2018.” Trillions of Fiat feces flung around since 08′ crisis and here we are possibly testing $1400!? No wonder crypto has taken off the way it has (closest thing we have to true free market) metals are boring AF. That’s why you hold both! Take some CRYPTO gains and save it in metals and forget about it. Don’t be a salty sacker 🙂
” Moody’s placed the U.S. Government’s rating on watch for a possible downgrade.”
While their credit rating deserves a downgrade, any agency that does it knows they will be sued by the U.S. Government for the effects of the downgrade…or just for money & power. Gotta remember who’s boss.
A Chinese rating agency has downgraded the US credit rating from AAA- to BBB+ just a few days ago.
“I believe there’s a good chance that gold will move toward and possibly over $1400 during 2018.” Trillions of Fiat feces flung around since 08′ crisis and here we are possibly testing $1400!?
I hate to be blunt … but you are FUCKING kidding me. $1400 oz au? We’re all being played
Go guzzle some more wine, dude
I think he’s had enough.
Nice pop today on one of your MSJ stocks, Dave. Thank you!
Awesome drill results!
Copper, uranium, and steel are my inflation plays.
I’m shorting gold, silver, and oil
Waiting for silver to go below 16, gold 1250, and oil 55;
then time to go long.
1400 gold is spot on at the end of this year; but….not now.
Don’t do it.
What are you, Harry Dented’s kid?