Silver prices | Short-Sellers Driving Gold and <b>Silver Prices</b> :: The Market Oracle <b>...</b> |
| Short-Sellers Driving Gold and <b>Silver Prices</b> :: The Market Oracle <b>...</b> Posted: 05 Sep 2014 11:10 AM PDT By: Alasdair_Macleod
It feels like the market is drained of all positive sentiment, which is reflected in the very low level of open interest in the futures market. These conditions are more consistent with a market that is bottoming out than one that is about to fall sharply. Meanwhile retail demand seems to be stabilising, with growing interest for coins in the west, and weekly physical deliveries in Shanghai have quietly doubled over the last two months. Demand for physical gold has the stealthy effect of increasing the gearing of the shorts in the paper markets. However, it looks like the short sellers have returned in some force, with good Comex volume last Tuesday and healthy turnover again yesterday (Thursday). Open interest in gold rose, which with a falling price confirms futures are being driven by an increase in short positions, most probably in the managed money category. This is shown in the chart below, and is particularly noticeable since 27th August, the start of the current decline. The silver chart shows the same symptoms of short-selling, after a heavy fall in open interest on 25-27 August, and a sharp jump yesterday of about 3,700 contracts. In silver's case there appears to be bedrock support at the $19 level. It is not sufficient to say that a strong dollar will automatically lead to a lasting fall in the gold price. The dollar's strength over the last few weeks has been mostly a reflection of weakness of other major currencies: the yen took an overdue tumble given Japan's deteriorating financial condition, the ECB cut interest rates from next-to-nothing to almost nothing, and sterling has been spooked by growing support for Scottish independence. None of this reflects a stagnant US economy, and there has been no change in the outlook for US interest rates to bolster the dollar. A more valid driver of the gold price is changing perceptions of financial and systemic risk. It is clear from current equity and bond markets, which are rising on diminishing volatility, that they are now regarded to be low-risk markets. This situation can persist for a while, as anyone who has sold into a bubble too early will confirm; but the surer way to lose money on anything other than the short-term is by investing in over-priced bonds and equities instead of oversold gold, on the basis that perceptions of risk will normalise. Monday. Eurozone: Sentix Indicator. Japan: M2 Money Supply, Economy Watchers Survey. US: Consumer Credit. Tuesday. Japan: Consumer Confidence, Key Machinery orders, CPI, BoJ Minutes. UK: Industrial Production, Trade Balance. Wednesday. US: Wholesale Inventories. Thursday. US: Initial Claims, Budget Deficit. Friday. Japan: Capacity Utilisation, Industrial Production (final). UK: Construction Output. Eurozone: Employment, Industrial Production. US: Import Price Index, Retail Sales, Business Inventories Alasdair Macleod Head of research, GoldMoney Alasdair.Macleod@GoldMoney.com Alasdair Macleod runs FinanceAndEconomics.org, a website dedicated to sound money and demystifying finance and economics. Alasdair has a background as a stockbroker, banker and economist. He is also a contributor to GoldMoney - The best way to buy gold online. © 2014 Copyright Alasdair Macleod - All Rights Reserved © 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.  |
| The Great <b>Silver Price</b> Subsidization :: The Market Oracle :: Financial <b>...</b> Posted: 05 Sep 2014 12:54 PM PDT By: Dr_Jeff_Lewis
I spend a lot of time examining eyeballs. The magnification required to focus light on the retina is very strong. This causes an inverted image. What I see in the lower right of my view is actually the upper left area of the patient's eye. Like everything, it takes some practice. In the days before digital records, I would turn the paper chart upside down to record my drawings. It is similar to the interpretation skills required when following precious metals. Prices ought to go up during times of geopolitical crisis or tension. They typically do not. They do predictably go down during certain monetary-related announcements or during paper market-related events such as options expiration. Or any other times that are ultimately profitable for the large banks - because of the sheer size and concentration of their naked short positions. This is also somewhat backwards. Most people understand cornering a market on the long side. But the opposite requires one to stand on their head. Stand on your head, and one begins to see a reflection in these otherwise-considered commodities. The monetary side. But it goes even deeper. At this moment, the market is viewed as bearish by an almost giddy trading culture - drunk on free money and the ever rising DOW and S&P 500. Traders riding the mountainous waves of liquidity. They speak the language, yet refuse to acknowledge that their game is rigged. Like children arguing about the World Wrestling Federation. There are two main factors holding silver prices back, making things appear upside down. 1. The long-term price controls have enabled ridiculously bullish physical fundamentals. 2. Monetary policy has resulted in an inflation adjusted price that would be orders of magnitude higher if properly factored. Low inflation adjusted prices, plus physical fundamentals. Adding up to a potential price well north of practically anything we can imagine. For now, lawless financial intervention maintains the grand illusion. For investors seeking shelter, preparation, and a physical store of wealth, silver prices represent the granddaddy of all subsidies - viewed upside and backwards. For more articles like this, and/or for a breath of fresh silver market reality amidst the stench of denial and technically meaningless short term price obsessed madness, check out http://www.silver-coin-investor.com By Dr. Jeff Lewis Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com Copyright © 2014 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors. © 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication. |
Gold and silver had a bad week, with gold falling $25 to a low of $1262 by the Comex close yesterday, and silver by $0.50. This morning UK-time prices opened a little better on overnight physical demand, no doubt stimulated by those lower prices. The background to this poor performance was dollar strength relative to weak currencies, with the yen, euro and pound all declining sharply.
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