econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 11 May 2016

Here Is What Makes Precious Metals Short Sellers Nervous ...

from Money Metals Exchange

-- this post authored by Stefan Gleason

Friday's disappointing jobs report sets the stage for markets to continue weighing the broader implications this week. Gold and silver prices rose modestly Friday on the increasing likelihood that the Federal Reserve won't raise rates in June. However, the precious metals still registered losses for the week and have corrected further this morning.

Gold prices traded slightly above the $1,300/oz level last Monday and Tuesday intraday but couldn't close above it. It appears that $1,300 is, for now, a psychological barrier to gold's continued advance. Short sellers in the futures markets are keen on defending it. Once cleared, gold could rally strongly on a fresh wave of short covering.

Silver Spot Price

The silver market also neared - but didn't quite reach - a formidable resistance level last week. Silver broke down below $18.50/oz in mid 2014 and has traded below it ever since. The last time silver tested the $18.50 level, in early 2015, it immediately turned down. Back then it also had to contend with a down trending overhead 50-week moving average.

Today the silver market is on stronger technical footing, having broken out far above the 50-week average, which itself is starting to turn up. The big institutional short sellers will try to defend $18.50 for as long as they can. But if their backs are broken - and that's a big IF in the short term - silver prices could zoom up into the $20s quite rapidly.

For now, silver and gold bulls will have to contend with a futures market that has the "big boys" positioned heavily against them - and those big boys are having another good week so far. On Friday's Money Metals podcast, precious metals market analyst Craig Hemke talked about the recent explosion in open interest in gold contracts on the COMEX.

"These big banks like JP Morgan, HSBC, Scotiabank, Barclays, UBS, Deutsche Bank, all the bad guys, [are] taking the short side of the trade versus the speculators [who are] taking the long side. And this paper just keeps getting supplied to try to tamp down price as it goes," Hemke said.

The risk for precious metals investors is that the institutional proliferators of paper contracts could continue to succeed in driving down spot prices in the near-term - especially after such an extended rise in the precious metals so far this year.

Meanwhile, the upshot for gold and silver bulls is that the extreme leverage now being employed in the futures markets exposes just how small the actual physical inventories of gold and silver are in comparison. Leveraged futures traders risk being wiped out if markets don't go their way. Holders of physical metal can sleep well at night regardless of what happens on the COMEX.

Is this the paper shorts' last stand? Time will tell.

It's certainly an interesting (and so far this year, fruitful) time to be owning physical precious metals. With all the record-setting leverage on the COMEX, and with gold and silver spot prices nearing critical must-defend areas for the shorts, we could see some major fireworks in these markets before the Fourth of July.

About the Author:

Stefan Gleason

Stefan Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, TheStreet.com, Seeking Alpha, Detroit News, Washington Times, and National Review.

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical Metals Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.




Econintersect Precious Metals


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Slow Economic Growth Will Be Around For A Long Time
The Job Guarantee, Wage-Price Inflation And Alternative Solutions: Part 2
News Blog
What We Read Today 28 March 2017
NASA Precise Landing Technologies Tested On Vertical Testbed Rocket
March 2017 Conference Board Consumer Confidence Highest Since 2000
Richmond Fed Manufacturing Survey Again Improves In March 2017.
Case-Shiller 20 City Home Price Index January 2017 Shows 5.7 % Year-over-Year Growth
A Changing Rulebook To Tame The New Global Arms Race
Infographic Of The Day: Chart: Understanding Alphabet's 4 Billion Dollar In "Other Bets"
Early Headlines: Asia Stocks And Dollar Up, Oil, Gold Steady, Obama Climate Policies Gone, US Oil Glut, Euro Surges, Shorts Remain, Trump Into Yemen?, Iran-Russia Deals, Cat 4 Cyclone Hits Oz, And More
March 27, 2017 Weather and Climate Report - Will the MJO Deliver a Nino?
The Most Reputable Companies Worldwide
Gut Bacteria Play A Role In Long-term Weight Gain
What We Read Today 27 March 2017 - Special Public Edition
Is Less More In The Smartphone Market
Investing Blog
The Dollar's Coming Impact On Markets
The Real 401k Plan Manager 27 March 2017
Opinion Blog
Macron May Lead But Le Pen Remains The Big Story
Is The 20th Century Still The 'Hayek Century'?
Precious Metals Blog
These Gold Stocks Will Produce Much Bigger Gains Than Gold Itself
Live Markets
28Mar2017 Market Close: US Stocks Posted Gains, DOW Closed Up 150 Points, Crude And US Dollar Steady
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government































 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved