Gold Commercial Short Positions Hit All Time High

[JohnQPublic]

Gold Commercial Short Positions Hit All Time High, As Gold Spike Protection Team Keeps Very Busy (http://www.zerohedge.com/article/gold-commercial-short-positions-hit-all-time-high-gold-spike-protection-team-keeps-very-busy)
In addition to the EUR data in today's CFTC Commitment of Traders report, another data point that caught our eye is the record exposure in outright commercial shorts in gold: this week they hit an all time high of 450,950. It appears that last week the desire to suppress any gold breakouts was at historic highs, even as net commercial exposure hit a 2010 low of -282.6, just slightly higher than that seen in the second week of January. If even with this massive onslaught to keep gold low by the LBMA, the precious metal managed to nearly hit $1,250 today, what will happen to gold when the 450k commercial positions are forced to cover?

[JohnQPublic]

I wionder what "algorithm" (http://gold-silver.us/forum/gold-silver-precious-metals/how-comex-works/msg42668/#msg42668) COMEX is using to be sure the shorts are covered?

[Quixote2]

The big banks are considered credit-worthy enough that they are exempt from posting the margin on their shorts, unlike you and I (peons).

snipped from
http://market-ticker.denninger.net/archives/2315-How-Wall-Street-Can-Win-Back-Confidence.html

All instruments that are underwater must be backed with cash collateral at the end of every day, no exceptions, marked to market nightly. I don't care if you want to claim it's a "custom agreement" or whatever - I have to post margin every night against underwater positions and so does every other individual and small investor. To let Berkshire, Goldman, Bank of America or others "off the hook" because of "perceived" balance sheet strength is hogwash. I've had $100k of underwater positions but have many multiples of that in liquid net worth, yet I still have to post cash. Everyone should be equal in the market in regard to backing their bets. A big part of the "advantage" these big boys have is the ability to write essentially unlimited-size bets without recognizing the impairment in cash during any time they go underwater. That's the check and balance on excessive position size that every individual is required to observe, and it must be so for the large corporation as well.

[skidmark]

More wisdom from Karl


If you fear hyperinflation do not look to Gold, instead buy a small (5% of your total portfolio) position in far out of the money LEAP CALLS on the major indices, spread across them. Why? Because (1) the tax structure on gold is unfavorable, (2) gold has never performed well on a contemporary basis .vs. inflation and (3) you can't eat it. If you try to get around the tax man structure you're going to get creamed; governments can and WILL prevent that from working.

[gunDriller]

More wisdom from Karl


If you fear hyperinflation do not look to Gold, instead buy a small (5% of your total portfolio) position in far out of the money LEAP CALLS on the major indices, spread across them. Why? Because (1) the tax structure on gold is unfavorable, (2) gold has never performed well on a contemporary basis .vs. inflation and (3) you can't eat it. If you try to get around the tax man structure you're going to get creamed; governments can and WILL prevent that from working.


it's odd how he understands & explains much of finance so well, but is averse to gold (like vampire to daylight, or something.)

so what happens when the counterparty that wrote the LEAP calls goes belly up ?


> gold has never performed well on a contemporary basis .vs. inflation -
how has it done in the situation where the Debt to GDP ratio increases over 1 ?

during the Bush years, and the Obama years, gold and silver did quite all right in paper valuations.

he doesn't mention that the prices have been suppressed by the US government - a gift to buyers with a long-term perspective.

James Dines, who was prescient enough to see value in gold @ $35 an ounce, seems happy with his holdings' maintenance of its value - despite the government price interference.


with short positions held by government backed banks at an all time high - doesn't there game become fairly clear ? European dealers are temporarily closing their doors because they can't get metal. physical gold commands a premium in Europe, for sure.

oh well, there's always Craigslist Berlin
http://berlin.de.craigslist.de/search/sss?query=gold

[skidmark]

More wisdom from Karl


If you fear hyperinflation do not look to Gold, instead buy a small (5% of your total portfolio) position in far out of the money LEAP CALLS on the major indices, spread across them. Why? Because (1) the tax structure on gold is unfavorable, (2) gold has never performed well on a contemporary basis .vs. inflation and (3) you can't eat it. If you try to get around the tax man structure you're going to get creamed; governments can and WILL prevent that from working.


it's odd how he understands & explains much of finance so well, but is averse to gold (like vampire to daylight, or something.)

so what happens when the counterparty that wrote the LEAP calls goes belly up ?






You eat them?