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Thursday, July 11, 2013

We May Have Just Made a Generational Bottom

From David's Desk 
David Schectman 

We May Have Just Made a Generational Bottom

In gold, the total commercial net short position is now down to 22,800 contracts, which is a low for a decade. In the last seven and a half months, the commercials reduced their net short position by 236,000 contracts - which is the equivalent of 23.6 million ounces. Someone with deep pockets (JPM?) has bought up $75 billion worth of gold in just over half a year.

Ted Butler thinks its JPMorgan, who currently are net long 65,000 contracts. They were net short 50,000 contracts on Feb 5.  That's a 115,000 swing from short to long in 5 months - which Butler refers to as "an unprecedented turn-around."  I really enjoy Butler's writing and he has been right on the money for a long time, but still, silver continues to fall.  He is a perfect example of how we can be right in every way but the price.  Of course, that's what manipulation is all about.  How much longer can this go on?  It will go on until it doesn't.  Hopefully for our dear readers and clients, that day is not far off.
Ranting Andy Hoffman sent me the following email below: 
"We may just have made a 'Generational' bottom."
Submitted by Tyler Durden on 07/10/2013 17:13 -0400
The punchline (as far as markets are concerned) of Bernanke's Q&A appears to be: Inflation and jobs signal more Fed stimulus needed and that Tapering does not end stimulus. In other words - highly accomodative policy needed for foreseeable future:
So on one hand Bernanke admitted he had to pop the HY bubble with the Hilsenrath leaks a few weeks ago (talk the market down), but is happy to take the equity gains in hopes they will trickle down to wealth effect, inflation and employment even if credit is spooked (and the bond market technically corrupted).
So keep buying - they'll always be a greater fool (The Fed) to sell to, no matter how much we destroy the markets.


Read the full article on

QE to infinity is still in place, and gold popped up on Bernanke's remarks.  Like I said the other day, Bernanke will not tarnish his legacy by tanking the markets before he hands over the reins to his successor.  Let's just pray it isn't Larry Summers, who in our view was one of the architects of the "kill the golden messenger" policy during the Clinton Administration. 

This fall we should see gold rise substantially.  It is usually the best time of year for gold and I just don't see the Fed doing anything foolish that would trash the market. 

Just saw a report on the national news (TV):  The affluent have slowed down their buying because of rising interest rates.  What else would you expect?  Like I keep repeating, QE is here to stay!

Gold is approaching $1,300 in the aftermarket on Wednesday evening.  It would be a good sign if gold could close well above $1,300 by week's end.  We haven't seen $1,300 since June 21.  $1,400 still looms large.  Check out the last 30-days in gold.




David Schectman
Miles Franklin