Loading ...Gold and gold Miners
Friday, March 23, 2018
Michael J. Ballanger
With reckless abandon and unconscionable spine, BUY silver…
Would it be that a picture is worth a thousand words? In the case of the graphics posted below, in a word, YES! Look at the positioning of the mighty Commercial Traders, who rarely lose money and who operate under the blinded eye of regulatory oversight and governmental sanctuary. As of last Tuesday, the most powerful group of traders ever to operate under the watchful eye of the Working Group on Capital Market had wiggled their collective arses out of a massive 41,497-contract short position in silver on January 23rd and arrived in full regalia this week short a mere 3,709 contracts. To provide some modicum of perspective, the Commercials were short a notional amount of silver that would correspond to 207,485,000 ounces of silver worth $3.3 BILLION at the $16.20 per ounce benchmark on January 23rd and are now short a notional 18,545,000 ounces of silver worth a paltry $300,429,000. In other words, the Commercials Cretins covered $3 billion worth of fantasy-land silver shorts in a mere eight weeks, the nature of which represented nearly 25% of world silver production in 2017 (885.8m ounces). But don’t let your emotional extremities get twisted into a tangled knot of outrage and indignation, we have seen this movie all too often before and the only reaction worthy of note is to go out and buy silver with both fists.
Are any of you actually LOOKING at this? Is my typing and ranting having ANY impact on your sensibilities or are you all simply content to count your wealth and tell war stories from the past? Is my opining a mere reminder of your fifth-grade teacher doing her octagenarian-best to help you to understand why “I before E except after C” makes any sense? The silver market is – RIGHT NOW – exactly where it was in 2001. It is absolutely PRIMED for a massive move to the upside and while it underperformed gold on Friday and is still worth less than one-eighieth its price, the behavior of the Commercial traders confirms an impending if not unexpected thrashing of the Large Speculators in the near future and in doing so, sets up an decent trading opportunity for all of us. I now have 60% positions bought in the SLV April $14 calls and am looking for a move through $17 to confirm the validity of the trade (and add the remaining 40%).
As for gold, while the COT structure is less than compelling relative to silver, gold’s tape action is simply superb, thrice rejecting downside probes beneath $1,310 and now solidly approaching the magical $1,360-1,370 “resistance zone”. I will refrain from going off on yet another tirade against trusting “technical breakouts” for gold and silver but what I WILL be doing is watching the commercials like a hawk if, as, and when gold probes that upper resistance zone which remains most formidable and has for years. It almost touched $1,400 back in 2014 but each test since then has been rejected at $1,360-1,370 so while I am a cynic in trading bullish breakouts, I suspect that, as I wrote back in January, something did indeed change in the December-January rally and I think that statement will be borne out with a successful assault on $1,400 followed by the surpassing of that ominous 2013 breakdown level of $1,525 later in 2018.