Loading ...I opined at the end of November that “Bullion bank short covering will become year-end profit-taking” and received confirmation last Friday when they covered the equivalent of over 5.6 million “ounces” and it set a floor for pricing as it closed with its first weekly gain in the past four and only the third up week in the last twelve. The good (and possibly GREAT) news came Friday afternoon with a 70,427-contract swing comprised of new long and covered short positions and one of the top five Commercial purchase COT weeks in history. This is a classic repeat of the lows seen in early December of 2015 and while not as extreme in terms of the aggregate short position, the size of the drawdown was breathtaking and bullish for the near-term outlook. But then again, that was the analysis I gave in late November and again last week and continue to believe that the gold miners are dirt cheap here and certainly less stretched than the valuations virtually everywhere else. There are no champagne flutes tinkling at the gold miner parties this year; it has been a “beer and pretzels” year and not a great deal of fun.
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