Extreme futures short selling is inherently self-limiting, because all shorts must soon be covered. The underlying commodity borrowed from someone else to be sold has to be repurchased and paid back. And in the futures markets, the price impact from a trader adding a new long contract or buying one to offset and cover a short contract is identical. Major short covering means massive gold- and silver-futures buying.
That will catapult gold and silver prices higher, gradually enticing investors to return. And with the Fed-distorted stock-market levitation finally rolling over, the extreme PM-futures shorting looks to have peaked. Every Friday afternoon, the CFTC publishes futures speculators’ positions as of the preceding Tuesday in its famous Commitments of Traders reports. And the latest from Tuesday the 7th reveals change is afoot.
While silver recently broke below its major support, this was on the most extreme silver-futures shorting in at least 15.7 years and almost certainly ever! When gold’s recent reversal gains enough momentum to look decisive, capital is going to come flooding back into silver on short covering alone at one of the fastest rates ever seen. Talk about bullish.
American futures speculators borrowing vast amounts of silver to sell it low is truly the only reason silver prices are so dismal today. But just like in gold, extreme shorts must soon be covered. So the record levels of silver shorts almost guarantee we are in for a monster silver upleg ignited by a short squeeze
Finally the gold price is superimposed over this CoT futures data as seen through the lens of the flagship SPDR Gold Shares gold ETF, which trades under the symbol GLD.
So gold is perfectly set up for a monster upleg in the coming months. Even before the stock-market selloff started to snowball, I was telling our subscribers that there was nothing to worry about in gold because the only reason it retested support was extreme futures short selling. Since those highly-leveraged shorts must soon be repurchased, there was never much risk of major new gold lows with shorts so extreme.
…..read more HERE
