With the war in the gold and silver markets continuing to rage, today a 50-year market veteran discussed what’s next after massive shorting by commercial hedgers and bullion banks.
John Embry: “I can’t say that I’m terribly surprised by what is happening to gold and silver prices this week given the remarkable build in the open interest on the Comex and the staggering level of the commercial — i.e. bullion banks’ — short positions…
Continue reading the John Embry interview below…
As gold and silver have reversed course this year and are in the early stages of a historical bull market, a fact confirmed by the dramatic gains in the HUI Index since January, the usual suspects have gone all-in to stop the advance.
Bullion Banks Shorting Staggering Amounts Of Paper Gold
If gold and silver had blown through $1,300 and $18 respectively last week, it would have attracted considerable interest and much more buying. To prevent this from happening, the bullion banks have shorted staggering quantities of gold and silver in the last couple of weeks.
The most recent COT (Commitment of Traders Report) showed an increase of 50,000 contracts in the commercial gold short position in just one week. And this shorting has continued unabated through today. The amount of gold being shorted on the Comex alone dwarfs the physical production of gold.
To put this in some perspective, the open interest has recently grown by well over 100,000 contracts in a short period. That represents over 10 million ounces of gold or close to $13 billion in notional value. In an industry which produces roughly 90 million ounces in a full year, that represents over 6 weeks of annual production.
I can’t think of another market that can withstand that degree of selling without buckling under the extreme selling pressure. However, even after repeated attacks, the gold price is still less than 3 percent off recent highs, and keeps bouncing back after each new assault.
In my opinion, this smacks of desperation on the part of the bullion banks, in a world in which the Western physical inventories are shrinking at an alarming rate, and the paper claims on them are surging into the stratosphere.
Pay Attention To Maguire And Mylchreest
recommend that investors who want to know the true status of the gold inventories in the very important London market pay very close attention to the comments of the well-informed Andrew Maguire, who appears regularly at KWN. Or they can read the brilliant essay by Paul Mylchreest, which appeared a week or so ago. Reinforcing the shortage in London is the pitiful level of inventory at the Comex in relation to the paper claims outstanding.
Ignore The “Noise”
Eric, I have said very recently that there is no middle ground left. Either the powers that be can continue to contain gold and silver in their current trading ranges for somewhat longer with their paper shenanigans, or there is going to be an upside explosion in prices that will shock most observers.
I again reiterate to your readers and listeners that they must ignore the ‘noise’ here, and they must acquire as much physical gold and silver as they can while it is still available. And similarly, the shares will be volatile, but the risk/reward is still heavily skewed to the upside, despite the huge move year-to-date.”
***KWN has now released the extraordinary audio interview with Bill Fleckenstein and you can access it by CLICKING HERE OR ON THE IMAGE BELOW.
***Also just released ALERT: This Shocking Piece Is A Must Read For Anyone Who Is Worried About The Endgame CLICK HERE.
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