Who Will Claim Victory with Gold and Silver?

In silver, the bullion banks went short another 8,345 contracts or 41.73 million ounces. That's more silver than the entire U.S. mining industry will produce in one year! As of Tuesday's cut-off, the bullion banks (4 or less) are now net short 56,401 contracts or 282.0 million ounces of silver.

See the chart here.

These same (4 or less) bullion banks went massively short gold last week as well. The net gold short position by the bullion banks increased by an eye popping 54,089 contracts! That's 5.4 million ounces of gold that the banks shorted in just one week!

See the chart here.

These overly massive short positions in the silver and gold markets by the bullion banks will be resolved by only two possible outcomes. Either the bullion banks manipulate a decline in prices to cover their shorts, or they get steam rolled by more and more buyers showing up and they are forced to withdraw from the market.

If the latter occurs there will be no shorts against all the new longs that will pile into the market, and we will have an historic rise in prices for both silver and gold. If the former scenario plays out we will have lower prices for both metals which will shake out the speculators, with the bail out money behind the banks this could be a distinct possibility.

Be ready for either outcome. This next week in the silver and gold markets is shaping up to be a humdinger!

Disclosure: Long gold and silver in the physical.

Comments

[Steven Hansen:]

thanks for the advise. i am long both so i need to keep my finger on the button.

Sep 13 04:23 AM

[tripleblack:]

I am long silver myself. I believe we will see the banks unwinding some of their short positions on silver, followed to a lesser degree by gold.

Sep 13 08:15 AM

[Michael Clark:]

Gold's going nowhere but up for the time being. Silver too.

Oil I don't like so much.

Sep 13 09:43 AM

[HATEFEEBAY:]

Long silver, physical, AGQ, SLW. After reading for the past year, I becuase a total silver bug and want NOTHING to do with US currency!

Sep 13 10:53 AM

[HATEFEEBAY:]

*became (this is what happens when I type without coffee in the morning)

Sep 13 10:56 AM

[Donald Ingram:]

LOL Know what you mean. Got to have that morning cup of 'Joe' first thing myself! One thing I forgot to mention in the article is that we could possibly see some panic buying start to take place. Thank you for the comments.

Sep 13 11:11 AM

[Chris - Lon...:]

Silver to the moon! =)

Sep 13 11:18 AM

[Laurence Hunt:]

Silver is leveraged to gold both up and down. I have been positioned in both for years. I am not a short-term trader, so will be holding even if the PMs decline next week (the bullion banks usually win, but it's wild when they don't). The intermediate and long-term indicators for both gold and silver are possibly the strongest they have been since the onset of the secular bull market in PMs in 2001. Between here and the spring of 2010, I am expecting some dramatic developments. PM stocks are still cheap, as noted by Adam Hamilton recently (www.safehaven.com/arti...). I'll admit I wish I had gone away in March 2008 and come back in October 2008 (though doing so is simply not my investment style). But all things being equal, I'm happy to be holding PM investments right here, right now. I'm following Michael C. and MHFT, so I can only commend what they have to say on most topics.....

Sep 13 11:54 AM

[ManAboutDallas:]

The Banksters play the chumps like a cheap violin; always have, always will. You can bet your last gold or silver bar The Banksters are going to manufacture yet another shake-out so they can comfortably cover this massive new short position they've put on.

These people OWN the casino!

THEY make the rules! ( for guess-who's benefit? )

It's been this way since the days of the Medici !

Two or three weeks ago, any bullish article on gold or silver was met with - mostly - scorn and derision. Now - mostly - all the comments are "Yeah, me too!".

That in itself ought to tell one all they need to know.

Is gold going to $3000.... $4000..... $5000...$????? ? Absolutely !

Is silver going to $20.... $50.... $100.... $????? ? Absolutely !

Is it mostly going to get there with NOBODY on board, because they've bought high and sold low until they were tapped out ? Bingo !


Be a Bankster. Buy weakness, sell strength. That's just what you're seeing them do right now in "the numbers".

Sep 13 12:27 PM

[Laurence Hunt:]

This is a market where the commercial shorts are used to winning - based on timing, as obviously they position themselves against the secular trend. Short squeezes are exceedingly rare in the Comex gold futures. However, it has crossed my mind that we might now be combining the ingredients for just such an event. Again, I am basically a simple buy and hold investor in the gold bull market. But such a rare event, if it did occur, would leave me smiling....

Sep 13 01:35 PM

[Donald Ingram:]

We can only live in hope! Would be very nice to see, what goes around - comes around! For too long now they have had it their way. Time for them to go down.


On Sep 13 01:35 PM Laurence Hunt wrote:

> This is a market where the commercial shorts are used to winning
> - based on timing, as obviously they position themselves against
> the secular trend. Short squeezes are exceedingly rare in the Comex
> gold futures. However, it has crossed my mind that we might now be
> combining the ingredients for just such an event. Again, I am basically
> a simple buy and hold investor in the gold bull market. But such
> a rare event, if it did occur, would leave me smiling....

Sep 13 01:56 PM

[Donald Ingram:]

SA - What has this comment have to do with this article? NOTHING!
There has been far too much spamming on the site recently.
Please take out your brooms and make a clean sweep of these creeps!

Sep 13 02:53 PM

[Barry Robbins:]

Although this particular gold/silver rally is a bit long in the tooth, it is clear what the long-term direction is: UP. Maybe we get some consolidating pull-backs - I hope so, because those are the buying opportunities. Everywhere you look, governments are trying to weaken their currencies. It is pretty simple - as long as foreigners continue to loan the US Gov't money - the US Gov't will never have a balanced budget, and the USD will continually weaken.

Sep 13 03:08 PM

[jimmy mcbain:]

Kiwi

Gold will go to US$3000 silver US$100. When? October 09.
Why ? The US $ is basically worthless. The Empire is bankrupt.

Sep 13 03:47 PM

[MarvinMBA:]

If the gold/silver complex are manipulated downward, could the China and other countries try to get rid go the dollars and take out the speculators? Also how many world wide investors are waiting on the sidelines to grab a bit of real money??? MarvinMBA

Sep 13 06:57 PM

[nobby73:]

The first thing that I am sure of if the commercial short positions are not linked to hedges of physical silver. If this is the case, then we have entities either betting silver will go down, or central banks trying to keep a lid on silver prices. If the latter, what is the purpose and where will it end? Artificially low silver prices will convince us that currencies are still sound? This is becoming a Mexican standoff and will only end in either the banks being forced to unwind the shorts, thus causing a spike in prices, or other measures to prohibit the purchase or owning long positions in the futures market. As I see it, the CFTC regulations in oil to curb "speculation" will be extended to spare the central banks and bullion banks if they can't bully the market. Either way, the do not have enough of the shiny stuff to settle these contracts, that much is obvious.

Sep 13 07:49 PM

[nova:]

There is a very peculiar situation:
- Both the USA and EU must keep precious metals prices down to protect both US$ and euro from sharp devaluation
- At the same time, cash rich countries (like china and Japan) can use these low gold and industrial commodities to further accumulate gold and natural resources and producing the companies

As I indicated many times, the present geopolitical situation is very reminiscent to 1930s when the USA and Britain moved from supporting Nazi Germany development to a direct confrontation with it.

Now, the USA and EU are moving to a direct confrontation with China. As back in 1930s, Russia is a wild card who will influence the balance of world power.

Sep 13 10:03 PM

[The Recusant:]

Nova -- Unless the US actually wants the dollar to devalue to encourage exports. The recent tariff on tires coming from China may be the first salvo of a trade war to see whom can export the most to save their economies. In such a situation, the banks may have to eat their shorts and allow the PM prices to rise.

Sep 14 03:00 PM