Trader Dan Norcini has outstanding commentary on the gold/silver markets (and other commodities), which can be found at http://www.jsmineset.com/ One aspect he monitors is the weekly Commitment of Traders report. Over the past few weeks he has uncovered a potentially extraordinary development which could support a very big move higher in the price of gold.
In summary, the swap dealers – the bona fide trading desks at banks that make markets in gold, paper vs. physical, for bona fide commercial users/hedgers – have been aggressively covering their net short position, in contrast to the proprietary “cartel” desks at banks, which have been increasing their paper short positions in an attempt to cap the price of gold/silver. In my view, based on Trader Dan’s empirical analysis, I believe this is more evidence that the Comex paper fraud is moving closer to GATA’s “commercial signal failure,” which occurs when the demand for physical gold completely overwhelms the ability of the paper shorts to deliver the actual goods. Here’s Dan’s excellent analysis: Gold: Look Out Above?
One possible interpretation of this is that the swap desks, because they deal in both paper and physical gold, have a first-hand view of physical availability and are attempting to reduce their exposure to the growing shortage of physical bars in both London and NY by reducing their net position and actually increasing their long position in later months, as pointed out by Dan. This would be consistent with the ever persistent reports out of London, and the actual delivery experience of our bullion fund, of delivery delays and an increasing tightness of physical supply.
I have been discussing with long-time colleagues the possibility that this summer may experience a big move higher in gold, contrary to the seasonals, as Europe and the U.S. continue to melt-down fiscally and economically, and the world continues to shift from fraudulent paper currencies into the safe haven of physical gold and silver. The COT report, as per Trader Dan, adds more evidence to support the view of a big move in gold soon.
UPDATE: This highly esteemed James Turk published commentary which echoes the view about a possible summer rally: “Few people expect silver prices to rise during the summer, which is normally considered a quiet period for precious metal prices. Maybe the big surprise this year will be a spectacular summer rally for the precious metals. After all, that is what the silver chart is telling us.” I recommend reading his commentary HERE