Gold Silver Update

On 19 February I told everyone to sell gold as all my indicators were negative. Looks like I was right. Although I have become a bit more bullish after that date because I saw huge inflows in GLD ETF.

Look at how much inflows there are in the GLD in the latest month. We even see a bit of an arbitrage opportunity here. While the GLD inflows continued in May, the paper gold price went down. We’ll monitor this closely in the next days to see if the GLD inflow continues.

On the managed money shorts (COT report), we see that the correction is finally starting. If the managed money short position correction completes to the upper channel, we could see gold go as low as $1150/ounce.

 

Silver could go as low as $15/ounce.

 

Premiums have come down, so I’m not at all bullish here. We could see a correction here because there is a lot of silver available. No supply shortages.

  

 

 

  

As for the COMEX. We see inflows in registered gold and a rise in open interest. Nothing special to report here.

 

And for silver, the registered silver stocks are still in a downtrend, pointing to a build up in leverage, which started in 2015.

 

Conclusion:

We’re in a mixed situation. On one hand we have ETF’s buying precious metals, which is bullish. But on the other hand we have weak premiums from both China and the Western world and the COT reports point to a short term bear case. So I wouldn’t be rushing into precious metals at this moment. Wait a month or two to see where we stand.

Gold/Silver Premium Update

The COT report this weeks shows that gold will go up in price as shorts are covering. But silver shorts seem to have already covered, so short term I think silver has done its course and I would be worried about a leg down in silver. Silver hasn’t done anything special in price, despite a record sale at the U.S. Mint, which is odd.

Gold is doing ok, more upside to come:

Silver shorts have covered half of their shorts, weakness in silver to come:

This is confirmed by the weakness in silver premiums at Shanghai:

Gold premium at Shanghai is stable:

APMEX silver premiums are falling:

Junk silver is also not doing too well, but I see that some silver bags are out of stock at APMEX, so I guess we will see a rise in premiums soon:

Gold premiums are rising:

Conclusion: buy gold, but hold off on silver for the time being.

Managed Money Shorts Gold and Silver

The gold and silver price may have hit a new low as predicted due to lower premiums and bad COT reports (managed money shorts were very low). But today I have better news.

According to the COT report the managed money shorts have all come back again and will support a higher price. So it is a good time to buy precious metals right now.

 

  

SGE withdrawals are robust, so there is Chinese demand although not too much. U.S. Mint sales are robust but not as high as in Q3. Premiums at APMEX are given below.

Premiums are back at their historic average, but still elevated.

 

  

Premiums in China are very high for silver, but not so high for gold.

 

Managed Money Short Gold and Silver

Here’s an update on the managed money shorts in precious metals. We have been pushing the ceiling here…

 

Gold/Silver Update

The interesting event for this week is to be found at COMEX gold and silver.

Registered gold is still hanging at lows.

The result is that leverage is still at record highs.

 

As gold is difficult to come by (especially when everyone is going to repatriate their gold), they turn to silver. Registered silver stock is seeing a trend change to the downside too.

This results into the same leverage build-up.

 

 On the managed money short side, the picture in gold is stable.

 

But for silver, the managed money funds are getting scarily long, which indicates that there will be a contrarian correction in silver to the downside.

  

On the premium side, we are seeing that they are dropping. It seems that nobody is interested in precious metals in the U.S.

This is visible in U.S. Mint sales, which are going nowhere but down.

Except for the Chinese, where silver premiums are still rising. Even though the silver inventories this week at Shanghai are rising to a record 350 tonnes (from a low of 90 tonnes in September 2014).

 

On the GLD inventory, we see that we are steadily going down. Of course, this can’t go down a lot more, because there is no gold left at the COMEX.

 

On the SLV inventory side things are looking flat.

Conclusion:

We see that the precious metals hub is definitively changing from the West to the East. The West doesn’t have any gold and doesn’t trade gold, while the Asians get more and more interested in precious metals. In the short term, we could see some downside due to an unfavorable COT report, but when looking at the leverage in COMEX stock, the gold price could blow up to the upside at any time. Timing is key, when the stock market crashes, gold will go up due to its inverse correlation. Will the stock market crash? Yes it will, we can see that in the declining macro indicators, lower GDP, lower PMI, jobless claims rising again, higher U.S. deficits, etc…

Gold is setting up for a huge short squeeze next week

We had a huge stock withdrawal on 8 May and I mean huge. Brinks just had a delivery of 137040.61 troy ounces on COMEX.

And it looks like this. The blue line (registered gold stock) plunged to unseen levels of 407402.284 troy ounces.

Paper gold leverage skyrocketed today, it’s unbelievable.

 

On top of that GLD has seen a huge withdrawal today of 11 tonnes, which is the highest gold withdrawal of this year 2015.

 And managed money shorts (red chart below) are at highs, setting up for a huge squeeze next week.

 

Watch out for next week, things are going to happen.

By the way, remember what I said about the COMEX silver having a massive trend change in stock?
It is continuing. Registered silver (blue line) is dropping fast.

Gold/silver managed money short update

Contrary to what many believe, I think that the spike in gold and silver on 27 April 2015 (see chart below) was not a short covering rally.

Because why are managed money short positions on 28 April 2015 (see charts below) at new highs for the year as shown below?

 

  

So I believe a short covering rally will still happen next week or so.

Managed Money Short Gold Update

Managed money shorters have been short squeezed in the past weeks, against a rising gold price as I predicted, the outlook for precious metals is going to be a little bit muted now, especially for silver.

Although I don’t expect any short squeezes going into next week I need to point out something interesting.

GLD has seen small outflows, which means hedge funds are again selling their physical gold into the market. Also the total gold ETF’s backed by physical gold saw outflows of about 20 tonnes a month. This has put pressure on the gold price.

But I don’t believe we will see further significant outflows as the COMEX gives us a clue on this.

Registered gold at the COMEX is hitting record lows again (blue chart below is plunging).

And paper gold leverage (see below) is clearly hitting a one year high, indicating a definitive bottom in the gold price. January 2014 (the spike in the chart below) is happening all over again, so I expect gold to go back to $1300/ounce again in short notice.

And precious metals premiums were up across the board, but not by a lot.

Managed Money Shorts Gold/Silver Update

Very interesting times now. Managed money shorts in gold hit an all time high (since I monitored it).

We hit 87349 short positions in gold and this even on a rising gold price. This clearly indicates gold will go higher on short squeezes in the next weeks.

 

If you want to compare, here is a historic chart. Indeed, it is an all time high.

Somehow, silver is weaker. Short positions even declined. So there is weakness in silver.

Managed Money Short Gold, copper, oil update

It is no surprise that precious metals were weak as we saw a very large position of shorts in the commercials. The large commercials have now started covering their shorts in gold and silver, so a reversal is near after about two weeks.

GLD physical stock has been very strong though. The stock level hasn’t come down. So we have support here.

 

U.S. mint sales are having a strong start in 2015.

Copper contango is now exactly at zero, so we are at an inflection point now. Copper is starting to bottom out in a few weeks.

WTI crude oil contango is flattening out and edging back to backwardation with a higher oil price coming.

All in all, things are starting to look positive again for the commodities.