A big rise in gold and silver shorts held by the big commercial banks not seen since the 2013 gold price smashdown, could suggest a repeat is in the offing.
LONDON (MINEWEB) – The signs are all there. The big investment banks – JPMorgan in particular – which have the financial clout to move the markets on their own through massive paper sales in the futures markets have, it is reported, been building short positions in gold and silver to a level not seen since just ahead of the big gold price smashdown of April last year.
Is history about to repeat itself? If we get another high profile bank analyst issuing a strong ‘sell short, or ‘slam dunk sell’ gold recommendation in the next few days then it may presage another attempt to knock the gold price, and the silver price, down very sharply. As was shown last April, such a move could negate any gold price gains so far this year – and more.
As Ed Steer commented in his most recent newsletter in an analysis of the latest COT report which showed that the Commercial net short position on COMEX increased by 5,548 contracts, or 554,800 troy ounces. The Commercial net short position now stands at 16.6 million troy ounces. “You’d have to go back to March of 2013 to see the Commercials holding this big a net short position in gold.
It was from that point in March of last year where gold got clocked for $400 the ounce by the end of July. One wonders what fate is in store for us in gold going forward? One would have to presume that it would be similar to the fate that awaits silver.”
(Silver also showed a big increase in the Commercial net short position at 290 million troy ounces, the highest since since December 2012 when silver was $34 an ounce. “One wonders how low JPMorgan et al will drive the price when they pull the pin on the technical funds this time around?” commented Steer.
Again though, as we commented a little over a month ago, respected chart analysts WaveTrack Interntional predicted that gold will hit a new three year low in August, with a somewhat similar pattern emerging in silver. But this same analysis – based on Elliott Wave theory suggests the precious metals will then surge throughout the remainder of this year and next, peaking around the end of 2016 at new record highs. These seem to support the price shakedown scenario, but do at least offer major hope for the gold investor beyond that.
For the rest of this article, click here: http://www.mineweb.com/mineweb/content/en/mineweb-gold-analysis?oid=247345&sn=Detail