The squeeze is on
Trading conditions on Comex suggest that gold and silver bears are about to be squeezed — potentially viciously. If so, then prices measured in fiat currencies have bottomed.
Let’s start with gold. This week, the price has rallied from a low of $4950 on 30th June to $4170 this morning. As is the case in silver the July contract and option series on Comex expired this week, an event which usually leads to a sell-off. That pressure on prices has ended.
As the chart above illustrates, it leaves open interest in the gold contract the lowest it has been since the run-up to the December 2015 low of $1050. This tells us that speculators who sell dollars to buy paper gold are even more absent as they were then, which was the springboard for a decade long $4500 dollar rise. In other words, they will buy gold futures, adding potentially 300,000—400,000 contracts to take it back into oversold territory.
This is the outlook that the bears, typically market-makers and bullion banks must now fear.
Indeed, market sentiment is similarly bearish to the 2015—2016 period. But this time
