A short squeeze in gold mirroring 2020’s $600 spike is becoming more likely.
August 28 (King World News) – Alasdair Macleod: Fool me once, shame on you. Fool me twice, shame on me…
The collective voices of the Managed Money category might say this to the bullion bank trading desks in the Swaps category. After being completely wrongfooted by the knockdown to $1680 on 9 August, the Managed Money category have corrected their mistake and returned most of their net longs to where they were before. This is the next chart.
After triggering the 9 August sell-off, with a view to closing their shorts, the Swaps are the losers, going short an unwelcome 31,502 net contracts while trying to manage the gold price. It is hurting their pockets — badly:
Gross and net, their shorts are now valued at $32.6bn net, and $46bn gross. Before the knockdown, they were $31.6 and $45 respectively…
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They will have pocketed some trading profits, but their net short position has become more intractable. And to rub salt into their wounds Jay Powell remained stubbornly dovish on inflation in his Jackson Hole speech on Friday.
The conditions for a short squeeze on the Swaps are increasingly hard to ignore, and a move up in the gold price, perhaps to mirror the $600 move between March and August 2020 is becoming increasingly likely.
***To listen to James Turk discuss Friday’s big 4+% rally in the mining stocks along with the surge in gold and silver as well as what to expect next CLICK HERE OR ON THE IMAGE BELOW.
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