by David Kranzler
Investment Research Dynamics
At the beginning of this week, almost every so-called gold market analyst was predicting a wash-out in precious metals because of the huge bullion bank short being reported in the COT report. A few of us believe that character of the market has changed and paper market price manipulators are losing traction – for a lot of reasons.
This week shows that the banks covered a portion of their shorts and the hedge funds and little guys sold down longs and increased their shorts. This information may be largely irrelevant. Interestingly, in data I’ve parsed and presented in a previous blog post, the beginning of two of the best gold/silver rallies since 2001 occurred at a time when the bullion banks held their biggest short position in gold futures (expressed as a ratio of total open interest).