Despite the large commercial short positions, today James Turk told King World News that despite the recent pullback, we may see a stunning surprise in the gold and silver markets.
James Turk: “In the early stages of a new bull move in any market there are some things that recur time and again. I view them as anecdotal evidence that a sustained price advance is underway…
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James Turk continues: “For example, I can’t count the number of times that I have heard over the past few weeks how overbought gold is. Maybe it is, but whether it is or not is irrelevant.
First of all, a market can stay overbought for months, especially when a new move is just beginning as the latecomers climb on board. If during this period of time you wait or hope for a pullback, you might end up being on the sidelines watching a major rise in price.
In other words, it is possible that the train has already left the station and that we are not going to see gold under $1,200 an ounce again, particularly because it is so cheap and undervalued on a historical basis. But there is an even more important point.
For at least 99% of the population, gold should be accumulated, not traded. Gold should be accumulated on a dollar-cost averaging program. View this accumulated gold to be your savings, and be disciplined about making your purchases regardless of whether the price is up or down on the day you are scheduled to buy.
In the long run, cost-averaging your gold purchases always works out, and there is a 100-year track record to prove it. Gold was $20.67 in 1913 when the Federal Reserve was created, so it has more or less been a one-way street for the dollar since then, notwithstanding the fluctuations along the way that give the temporary appearance of dollar strength and gold weakness.
So leave the trading to the pros, particularly in those markets that are subject to heavy government intervention and manipulation. We saw some of that manipulation today in gold. Both gold and silver were breaking out of their recent consolidation patterns earlier today. Silver in particular was very strong, being on the verge of taking out its February high. Then out of nowhere and with no news of significance, both precious metals got slammed.
It was a raid, probably in preparation for Wednesday’s Federal Reserve meeting. A sharp selloff like we saw today is designed to create doubt in an investor’s mind about whether to buy now or hold off until after the Fed meeting. It’s an example of the Fed’s oft-repeated mantra of “controlling expectations.” So today we saw the central planners trying to control expectations through their selling pressure on the gold price.
Despite Pullback, We May See A Major Surprise In Gold & Silver
Regardless, here are some stats that have the potential to send gold to the moon. The Comex reported today that gold open interest rose another 2,245 contracts to 506,363, which is another in a string of new multi-year highs. In the Commitment of Traders report on Friday, the commercials increased their net short position by 24,863 contracts to a net short position of 195,372 contracts.
That’s 19.5 million ounces of paper-gold, much of which is being sold short by brokers for their central bank customers as outright intervention to cap the gold price. The gold market is not overbought; it is oversold in the sense that this huge short position will need to be covered, which is why I think a moonshot – which is a rare event – is possible.
The bottom line is that gold is trading differently than it has for years, and even silver is showing signs of coming to life. There is nothing bearish about this daily chart of the spot gold price here in London. Gold is clearly in an uptrend marked by this “rising flag” pattern.
Since our discussion in early December when I suggested that the bottom was in place for the precious metals, I’ve been waiting for them to explode out of nowhere when few people were paying attention. That’s what happened earlier this year, and moves like that are typically the start of major bull markets.
That means it is highly unlikely for gold to fall back below $1,200. And with the widespread pessimism about gold being overbought, gold is ripe to explode higher still, regardless – or maybe because of – this week’s Federal Reserve meeting.
So for the next couple of days the central planners will be out in force, but so too will the buyers of physical gold, just waiting to scoop up any bargains.” ***KWN has now released the incredible audio interview with former White House official Larry Lindsey, where he discusses the coming chaos, the fight for freedom, gold, and how to take back control of our money, and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***ALSO RELEASED: 50-Year Veteran Warns The World Is Headed For Some Very Difficult Economic Times CLICK HERE.
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