The latest commitment of traders report (COT report) showed that the hedge funds on the Comex (the “managed money” account) is now net short 33.9k contract of paper gold. This is a record net short position in paper gold for the managed money account on the Comex. The previous all-time high was 27.2k contracts at the end of December 2015.
This explains a lot to me about the character of the price decline in gold since early April. Just like in the stock market, the large macro “quant” funds use computer algorithms to momentum trade Comex futures. It’s this factor that caused the price of gold to drop quickly once it went below its 50 dma on April 12th. The shift to a net short positioned reflects hedge fund computers unloading long positions and piling into the short side.
At some point this dynamic will go the other way and, at the very least, there will be a significant short-covering rally as the hedge fund positioning swings back the other way. This will really get interesting if the hedge fund algo move to cover shorts on the Comex at the same time the stock market heads south again. This would stimulate a hedge fund algo party that could finally send gold over $1400.
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https://www.forbes.com/sites/katinastefanova/2019/04/25/three-reasons-why-gold-will-outperform-equities-and-bonds/#54f6a55e60a0 By Katina Stefanova | April 25, 2019
It doesn’t seem to matter who has the short or long position; the price seems well under control. The mechanisms of that are not completely understood by anyone not involved in the manipulations.
Average ore grades of G & S are declining. Price of G & S are so low there isn’t much capex for exploration for new mining projects. Some proposed or current mines are being rejected or shut down for one reason or another [environmental, etc.].
The cost of mining & refining to .999 or .9999 is increasing. So that alone would seem to be a reason for prices to climb incrementally. But I would be surprised if prices don’t remain very range bound until one day, closely corresponding to [or closely preceding] a major economic calamity, the prices in fiat go up a lot.
The price in dollars of G & S could easily be the catalyst or “black swan” or tipping point in the current system…and they know that.
Imagine in the next 6 months if gold went to around $1375, and silver to around $19. Fiat would POUR into them from that point, drain out of cryptos, stocks and bonds, and there could be a “runaway train” effect.
A lot of people may not know, or have forgotten what G & S are, but many “want to believe” again. Give them a reason and the train leaves the station under full throttle.
Strangely Bitcoin is going up lately too.
Maybe it’s their tactical move to take away some gold investors towards Bitcoin.
Masters tricked a lot them before , when they bought bitcoin for more than $10000.
It looks now like fools rally again.
Gold is only ultimate investment.
You should be able to answer that question for yourself.
So why doesn’t the price go down to zero if it is a synthetic paper market?