Gold and silver surge ahead
Amid signs of an intensifying derivative crisis in silver, gold is probably beginning to discount disruption in paper markets. Western speculators are sidelined.
Looking into the guts of COT reports, we see that the increase in Comex open interest in gold does not much reflect managed money buying into momentum. It rather reflects Globex trade, predominantly Asian in origin buying futures presumably with a view to taking delivery.
Is this why Comex stopped reporting stand-for-deliveries from 15th January in both contracts? Is it a warning sign of derivative problems?
Gold and silver continued to rise this week, both establishing new record prices in all currencies. In early morning European trade, gold closed out the week at $4915, up $308, and silver at $98.20 is up $8.10. Overnight, they hit $4967 and $99.30 respectively.
On Comex, volumes in both contracts were high, but declining somewhat in silver as the price rose, evidence of an intensifying squeeze on paper shorts.
Why is it that hedge funds are not playing the silver game? It is reasonable to suggest that they should be making hay out of this short squeeze, but they appear not to. Instead, they seem scared by silver’s sheer volatility.The next chart continues to illustrate this fact:
