Physical gold and silver markets remain tight.

April 30 (King World News) – Alasdair Macleod out of London:  There were few surprises in tonight’s Commitment of Traders’ release, other perhaps than the Non-Reportable category which went against the grain and added 4,863 contracts to their net long position of 31,695 the previous week to 36,558 last Tuesday. Both Managed Money (hedge funds) and Other Reporteds cut their longs by 10,879 between them.

Producers and merchants cut their short hedges by 4,039 contracts net, suggesting they believe paper prices undervalue gold. The result was the Swaps (bullion bank trading desks) only managed to reduce their net shorts by less than 2,000 contracts. It will have been disappointing for them, because they are on a mission to close down as many of their shorts as possible in these inflationary times. 

The money-value of their shorts is our next chart.

They are still short $36bn gross, or $24bn net — a substantial improvement from last year, but still historically high. There’s no doubt that they will try to continue to squeeze down the Managed Money and Other Reportables. But at these levels, the smaller Non Reportables appear to be buying the dip, so they might not be so easily shaken out. 

In terms of an over-bought/over-sold guesstimate, I would say Comex is looking moderately oversold. Hedge funds are only net long 50,651 contracts against an average net long of 110,000, and they have been net short, instead of net long, before. Open interest is low, but has been lower, as our last chart shows. 

Physical Gold & Silver Markets Remain Tight
We’ve had a few weeks of this non-action now, and perhaps it will require an external event to resolve the stalemate in the paper markets. For bulls, there is comfort in continuing reports of very tight physical markets which suggests that the downside is limited and the correct price for gold, and silver for that matter, is somewhere above current levels.

***To listen to legend Steven Dean discuss what to expect next in the gold and silver markets as well as what he is doing with his own money CLICK HERE OR ON THE IMAGE BELOW…

***To hear Alasdair Macleod give another incredible look at the situation in the gold, silver, and mining share markets CLICK HERE OR ON THE IMAGE BELOW.

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