Loading ...Gold, silver climbing a wall of confidence, NOT worry
Gold and silver are NOT climbing a wall of worry, but rather a wall of confidence. The true undervalued nature of both metals is suddenly becoming obvious to those who were previously unaware. Years of MOPE are now melting away like late winter snow on a balmy spring day. Many people who never paid any attention to the fundamentals or suppression of the metals are now shaking their heads in disbelief at how dirt cheap they appear. That’s because they were, and ARE.
Yesterday’s $28.30 gain came with a decrease in open interest of 7,012. That is a short covering rally at its finest. While the silver gain of 87 cents didn’t come with any OI decline (it was virtually unchanged) they sure as hell weren’t adding to their shorts. Today is another scorched shorts kind of day. Pain and suffering are getting to be a daily routine for them. The billions of losses suffered over the past month
The “tells” that this rally is explosive are numerous. The physical premiums remain elevated. Trading volume is still relatively low. The open interest isn’t going ballistic high. Gold and silver aren’t getting hammered during Crimex hours. The physical offtakes at the exchanges have been relentless. Previously bearish pundits are getting out ahead of the freight train and conceding $3k or even $4k. They will still ultimately get smashed by the freight train at those levels as the CTRL-P button remains stuck forever.
It’s been instructional watching lumber over the years, but even more so since last April. Since last April lumber has went from $270 to $700, with lumber buyers still lined up by the tens of thousands. Many building materials are now unavailable at any cost. I know firsthand, I am one of them standing in line. Limitless bid, no offer. If your choices are shutting down hundreds of job sites or finding anything, at any cost you do what you do. This is the food fight analogy I often speak of. Physical gold and silver have also arrived at their food fight phase. If you are short in any way, whether it be via futures, options, lease, rehypothecation, or loan you are basically screwed. Buying your way out is now hugely problematic. When gold or silver reach “no offer” like lumber has there will be no overhead resistance. THAT’s when true price discovery will begin.
James Mc…