Ares
27th July 2015, 07:23 AM
Records Keep Shattering
Last week’s price action, as we know, saw gold being dragged in a monstrous shorting undertow that left gold & silver spot prices at weekly closes under $1,100 and $15, respectively. The reason why this is happening is something I’ve covered at great length, but the affect which these new price lows are having on retail and wholesale demand are colossal!
For months, silver has been experiencing record sales while retail gold sales at Western mints have been truly asleep. This price dive has now awakened some very pent up demand, producing some of the largest demand numbers seen in years. This chart of US Mint demand for the month of July speaks for itself…
http://thewealthwatchman.com/wp-content/uploads/2015/07/Bull-market-2.png
Remember, this chart is several days old, as demand is now over 143,000 oz, but as you can see, July is set to become the all-time highest July sales month in the near 30 year history of the American gold eagle coin. Here’s what the chart now looks like, compared to all the largest sales months of the past 10 years…
http://thewealthwatchman.com/wp-content/uploads/2015/07/Bull-market-3.jpg
Gold eagle sales are now blazing a trail to a probable finish in the top 5 sales months of all time! Very impressive!
Meanwhile, China(who vastly understated their gold reserves, as detailed by a friend of mine), continues apace to break all its previous records.
In the last 2 weeks alone, the Shanghai exchange has delivered another ridiculous 130 tonnes of gold to Chinese citizens! 130 tonnes in 2 weeks!
Put another way, Chinese citizens are now demanding about 13 tonnes of gold per business day!
If that wasn’t enough though, GLD “inventory” also continues to vanish, with “stockpiles”(of paper journal entries) now sitting as low as 680 tonnes. I promise you this: whatever physical gold is actually left in the GLD system there, is shortly to be stamped with Mandarin characters!
However, what’s really a head-turner though, is what continues to be happening in the Comex positioning of gold and silver contracts there…
The Comex “Honey Trap”
Here’s something to remember, as we head into Comex options expiry this week…because, if history is any guide, the cartel will be keen to make these paper losses in precious metals have some staying power…at least until expiry is over with! This is a process that should take a few more days, and perhaps spill over some into next week as well.
As most of you know, I’ve taken some time to spell out how JP Morgan is not the big short in silver/gold, and they still aren’t(at least, not in raw Comex futures contracts). With each passing day, the situation in those futures gets more and more surreal…as hedge funds lap up whatever shorts the banks place in their doggie bowl!
I’d firmly believed during last week’s price attacks, that the banks were going long every possible ounce they could get….and boy, they did not let me down!
In fact, I had to take a second look at these numbers, because I couldn’t believe my eyes the first go-around, just look at this!
Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
187,720 159,441 46,943 189,676 211,260 424,339 417,644
Change from Prior Reporting Period
-3,294 16,251 -4,567 5,731 -21,154 -2,130 -9,470
Brothers….do you see what I see?
The commercials(banks) covered a net amount of shorts totaling nearly 27,000 contracts! Remember, each comex gold contract equals 100 contractual ounces of gold…That’s nearly 2.7 million ounces of contractual gold! Do you realize what that means?
It means that as of last Tuesday, the banks were almost neutral on Comex gold…
It means that in 5 trading days, the banks covered an amount of gold shorts that is greater than all the physical gold bought by the Russian Central Bank in all of 2015!
It means that(since the shorting continued throughout the next 3 days after the COT cut-off), that banks likely closed that gap by even tens of thousands of contracts more.
This action is absolutely historic, and the reason why should be apparent to anyone who views this next chart…
http://thewealthwatchman.com/wp-content/uploads/2015/07/Bull-market-1.jpg
There you have it….for the first time ever, zerohedge shows us that the banks have successfully suckered the hedge funds into going so deeply short, that those hedge funds are now net short gold!
The hedge funds have never been the price-setters in gold, no matter what they’d like to think of themselves. The fact remains that the bullion bankers have always set the price, and will continue to do so until the end of the current banking and monetary system. The fact that the banks, the real price-setters, bought up nearly 2.7 million ounces of paper gold should make you bullish out of your mind!
By the way, zerohedge also shows us what happened the last time gold was anywhere near this heavily shorted by the banks:
http://thewealthwatchman.com/wp-content/uploads/2015/07/bull-market-8.jpg
That, my friends, is a near 100% price rally, which was largely fueled over an 18 month period by major short-covering. Understand, this is not a prediction I’m making, but I’m simply saying that if that same rally were to occur off these lows, it would take gold well past $2,000. However, when the trap is finally sprung, and the system is done…it will not take anywhere near 18 months to hit numbers like that. It will be a much shorter ordeal.
Silver Trap is Set Too
But gold’s not the only trap that’s been set…the trap in silver is now becoming quite deadly for those on the short end. Just check out at these COT numbers in silver!
Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
66,576 62,331 20,421 79,791 90,958
184 5,492 -1,210 3,845 -577
The banks covered more than 20 million ounces in silver as well! JP Morgan has long sat on a pile of physical silver as a magnificent hedge against the spike to come, and if they’ve covered as many shorts as I believe they have...they will profit most handsomely from the system’s demise.
However, as unbelievably bullish as all this now is, there’s one other point that I want to bring to your attention: one that I haven’t previously covered before…
The Coming Supply Shock
Ed Steer recently covered something in an interview, which I found to be quite compelling. It had to do with the practice of “high-grading”(mining the best, cheapest deposits to stay afloat). He made the statement that these mines have now had to high-grade so long to keep their doors open…that he expects the very moment silver and gold reach profitable levels again…those mines will turn off the high-grading process in a literal snap.
When that happens, he said that mining supply will likely plunge over 20% overnight, as the mines have high-graded so long, that they’ve now made many other reserves uneconomical to recover later on. As soon as they’re able to stay in business using normal mining procedures and techniques, they will do so.
In other words, when gold and silver reach, say, $1,300 and $26, respectively, expect available supply to be instantly cut by up to a quarter!
Just imagine: the next price spike occurring inside a great financial panic, except this time the banks will all be long! This time there will be also an enormous reduction of available silver and gold supply….just when the world wants/needs them the most. It will be the perfect storm for the biggest rally the world will have ever witnessed in precious metals…It will truly be breathtaking to watch.
Conclusion
Western governments and media continue to work overtime, to bring us all the most overwhelming amount of anti-gold/silver propaganda I’ve ever seen. They’re working hard to make sure you that stop trusting the only financial instruments that will actually survive what’s about to happen around the globe.
Despite that propaganda though, the vast majority of buyers who matter, are not taking the bait. From the US Mint, to GLD drainage, to Russian Central Bank gold purchases, world physical gold-buying has literally never been higher in history. China alone being on pace to acquire roughly 2,500 tonnes of gold this year, should give even the most ardent gold bears some serious pause.
I want to ask a final question here: is this the sort of behavior that one witnesses at the end of a bull market?
Absolutely not brothers! In fact, quite the opposite is true! At the end of bull markets, you always see so many people clamoring to sell the asset in question, that they can barely find a buyer!
Ahh, but someone has fallen for their trap though: the hedge funds! Without willing chumps to go short those millions of ounces on the Comex…the banks would’ve been truly stuck. Now though, thanks to the foolish gullibility of that managed money sector, the banks are a hair shy of being off “Scot free”!
Amazing.
All those hedge fund managers ganging up on silver and gold(like rats on a piece of cheese), should’ve brushed up on their “Star Wars” lore.
Had they done so, they’d have most certainly remembered Admiral Ackbar’s timeless words of wisdom…
http://thewealthwatchman.com/wp-content/uploads/2015/07/Bull-market-4.jpg
http://thewealthwatchman.com/the-trap-has-now-been-set-on-the-comex/
Last week’s price action, as we know, saw gold being dragged in a monstrous shorting undertow that left gold & silver spot prices at weekly closes under $1,100 and $15, respectively. The reason why this is happening is something I’ve covered at great length, but the affect which these new price lows are having on retail and wholesale demand are colossal!
For months, silver has been experiencing record sales while retail gold sales at Western mints have been truly asleep. This price dive has now awakened some very pent up demand, producing some of the largest demand numbers seen in years. This chart of US Mint demand for the month of July speaks for itself…
http://thewealthwatchman.com/wp-content/uploads/2015/07/Bull-market-2.png
Remember, this chart is several days old, as demand is now over 143,000 oz, but as you can see, July is set to become the all-time highest July sales month in the near 30 year history of the American gold eagle coin. Here’s what the chart now looks like, compared to all the largest sales months of the past 10 years…
http://thewealthwatchman.com/wp-content/uploads/2015/07/Bull-market-3.jpg
Gold eagle sales are now blazing a trail to a probable finish in the top 5 sales months of all time! Very impressive!
Meanwhile, China(who vastly understated their gold reserves, as detailed by a friend of mine), continues apace to break all its previous records.
In the last 2 weeks alone, the Shanghai exchange has delivered another ridiculous 130 tonnes of gold to Chinese citizens! 130 tonnes in 2 weeks!
Put another way, Chinese citizens are now demanding about 13 tonnes of gold per business day!
If that wasn’t enough though, GLD “inventory” also continues to vanish, with “stockpiles”(of paper journal entries) now sitting as low as 680 tonnes. I promise you this: whatever physical gold is actually left in the GLD system there, is shortly to be stamped with Mandarin characters!
However, what’s really a head-turner though, is what continues to be happening in the Comex positioning of gold and silver contracts there…
The Comex “Honey Trap”
Here’s something to remember, as we head into Comex options expiry this week…because, if history is any guide, the cartel will be keen to make these paper losses in precious metals have some staying power…at least until expiry is over with! This is a process that should take a few more days, and perhaps spill over some into next week as well.
As most of you know, I’ve taken some time to spell out how JP Morgan is not the big short in silver/gold, and they still aren’t(at least, not in raw Comex futures contracts). With each passing day, the situation in those futures gets more and more surreal…as hedge funds lap up whatever shorts the banks place in their doggie bowl!
I’d firmly believed during last week’s price attacks, that the banks were going long every possible ounce they could get….and boy, they did not let me down!
In fact, I had to take a second look at these numbers, because I couldn’t believe my eyes the first go-around, just look at this!
Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
187,720 159,441 46,943 189,676 211,260 424,339 417,644
Change from Prior Reporting Period
-3,294 16,251 -4,567 5,731 -21,154 -2,130 -9,470
Brothers….do you see what I see?
The commercials(banks) covered a net amount of shorts totaling nearly 27,000 contracts! Remember, each comex gold contract equals 100 contractual ounces of gold…That’s nearly 2.7 million ounces of contractual gold! Do you realize what that means?
It means that as of last Tuesday, the banks were almost neutral on Comex gold…
It means that in 5 trading days, the banks covered an amount of gold shorts that is greater than all the physical gold bought by the Russian Central Bank in all of 2015!
It means that(since the shorting continued throughout the next 3 days after the COT cut-off), that banks likely closed that gap by even tens of thousands of contracts more.
This action is absolutely historic, and the reason why should be apparent to anyone who views this next chart…
http://thewealthwatchman.com/wp-content/uploads/2015/07/Bull-market-1.jpg
There you have it….for the first time ever, zerohedge shows us that the banks have successfully suckered the hedge funds into going so deeply short, that those hedge funds are now net short gold!
The hedge funds have never been the price-setters in gold, no matter what they’d like to think of themselves. The fact remains that the bullion bankers have always set the price, and will continue to do so until the end of the current banking and monetary system. The fact that the banks, the real price-setters, bought up nearly 2.7 million ounces of paper gold should make you bullish out of your mind!
By the way, zerohedge also shows us what happened the last time gold was anywhere near this heavily shorted by the banks:
http://thewealthwatchman.com/wp-content/uploads/2015/07/bull-market-8.jpg
That, my friends, is a near 100% price rally, which was largely fueled over an 18 month period by major short-covering. Understand, this is not a prediction I’m making, but I’m simply saying that if that same rally were to occur off these lows, it would take gold well past $2,000. However, when the trap is finally sprung, and the system is done…it will not take anywhere near 18 months to hit numbers like that. It will be a much shorter ordeal.
Silver Trap is Set Too
But gold’s not the only trap that’s been set…the trap in silver is now becoming quite deadly for those on the short end. Just check out at these COT numbers in silver!
Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
66,576 62,331 20,421 79,791 90,958
184 5,492 -1,210 3,845 -577
The banks covered more than 20 million ounces in silver as well! JP Morgan has long sat on a pile of physical silver as a magnificent hedge against the spike to come, and if they’ve covered as many shorts as I believe they have...they will profit most handsomely from the system’s demise.
However, as unbelievably bullish as all this now is, there’s one other point that I want to bring to your attention: one that I haven’t previously covered before…
The Coming Supply Shock
Ed Steer recently covered something in an interview, which I found to be quite compelling. It had to do with the practice of “high-grading”(mining the best, cheapest deposits to stay afloat). He made the statement that these mines have now had to high-grade so long to keep their doors open…that he expects the very moment silver and gold reach profitable levels again…those mines will turn off the high-grading process in a literal snap.
When that happens, he said that mining supply will likely plunge over 20% overnight, as the mines have high-graded so long, that they’ve now made many other reserves uneconomical to recover later on. As soon as they’re able to stay in business using normal mining procedures and techniques, they will do so.
In other words, when gold and silver reach, say, $1,300 and $26, respectively, expect available supply to be instantly cut by up to a quarter!
Just imagine: the next price spike occurring inside a great financial panic, except this time the banks will all be long! This time there will be also an enormous reduction of available silver and gold supply….just when the world wants/needs them the most. It will be the perfect storm for the biggest rally the world will have ever witnessed in precious metals…It will truly be breathtaking to watch.
Conclusion
Western governments and media continue to work overtime, to bring us all the most overwhelming amount of anti-gold/silver propaganda I’ve ever seen. They’re working hard to make sure you that stop trusting the only financial instruments that will actually survive what’s about to happen around the globe.
Despite that propaganda though, the vast majority of buyers who matter, are not taking the bait. From the US Mint, to GLD drainage, to Russian Central Bank gold purchases, world physical gold-buying has literally never been higher in history. China alone being on pace to acquire roughly 2,500 tonnes of gold this year, should give even the most ardent gold bears some serious pause.
I want to ask a final question here: is this the sort of behavior that one witnesses at the end of a bull market?
Absolutely not brothers! In fact, quite the opposite is true! At the end of bull markets, you always see so many people clamoring to sell the asset in question, that they can barely find a buyer!
Ahh, but someone has fallen for their trap though: the hedge funds! Without willing chumps to go short those millions of ounces on the Comex…the banks would’ve been truly stuck. Now though, thanks to the foolish gullibility of that managed money sector, the banks are a hair shy of being off “Scot free”!
Amazing.
All those hedge fund managers ganging up on silver and gold(like rats on a piece of cheese), should’ve brushed up on their “Star Wars” lore.
Had they done so, they’d have most certainly remembered Admiral Ackbar’s timeless words of wisdom…
http://thewealthwatchman.com/wp-content/uploads/2015/07/Bull-market-4.jpg
http://thewealthwatchman.com/the-trap-has-now-been-set-on-the-comex/