Patient gold and silver bulls are going to be rewarded.
April 23 (King World News) – Alasdair Macleod out of London: There’s not much to report in this Commitment of Traders report tonight. The Swaps (bullion bank traders) increased their short positions by a modest 3,692 contracts, and the Managed Money category (hedge funds) increased their longs by a net 2,617.
But both their longs and shorts increased to produce that total. Other Reporteds cut their longs by 1,993; but the interesting category is Non Reportables, comprised of smaller traders, who increased their longs and cut their shorts for a net gain of 3,781 contracts. It is this category that is likely to be standing for delivery, which during the week to this report totalled 5,019 contracts (15.6 tonnes) …
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The lack of definite bullishness from the hedge funds appears to have encouraged the bullion banks to job this market, pushing the gold price up to suck in weak buyers before marking it down to trigger their stops. Against their intractable short position, there is little more that they can do.
Meanwhile, the dollar had a bad week, illustrated by the trade weighted index.
The bear market rally stalled at 93 end-March and looks like having yet more downside. This is likely to motivate hedge funds into selling dollars/buying gold. The yield on the ten-year US Treasury has also backed off slightly, normally bullish for traders in gold looking at cross rates.
My last chart, sent to me by ADM Investor Services, shows how broken markets are. It shows how commodities have roared ahead since the start of the year, yet gold and silver are DOWN, the worst performers on the chart.
It is this sort of performance which discourages investors from buying gold, which with the bullion banks short is the intention. The correct way to look at it is gold and silver are ridiculously under-priced, and patient bulls will be rewarded handsomely.
KWN will be releasing two audio interviews later today
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