Precious metals expert Michael Ballanger dissects Friday’s COT report.
Last Friday afternoon after I read the COT (Commitment of Traders report) numbers, I immediately looked over at the quote terminal only to see that the HUI (NYSE Arca Gold BUGS Index) was going to close out the week a tad below 200 and nearly exactly double where it was on Jan. 19, and I shook my head with utter reverence. Here you have gold bullion trading as high as $1,287.80 on March 11, the same day that the HUI closed at 175.83, with the Commercials having moved from 2,911 net shorts on Dec. 4 to 195,000 net shorts the prior Tuesday. Gold is now over $50 lower than March 11 but the gold miners continue to defy both logic and gravity, begging the question, “Are they predicting another major leg northward in physical bullion?” Whatever the answer, the move in my beloved gold and silver miners has been simply AWESOME and while I have jettisoned all options and leveraged ETFs, I continue to hold all of my original GDXJ (Market Vectors Junior Gold Miners) position from late 2015 [< $19 ACB], as well as all of the penny explorers.
The Long and Intermediate-term trends for gold and silver continue to prevent the kinds of waterfall declines associated (in the past five years) with relatively high aggregate Commercial short interest numbers, such as the one we got tonight for gold (231,787 contracts) and silver (106,646 contracts). It’s understandable that the Commercials have pressed their shorts in the physical metals, but that they have failed to turn sentiment for the miners is setting up a very real possibility of a Commercial Signal Failure that morphs into an epic short squeeze.
The chart shown below is enough to scare even the staunchest of gold bulls (like …read more