by Alasdair MacLeod
Gold moved sideways this week in a tight range. The story for silver was the same, but with a little more volatility, as one would expect. By morning trading in Europe, gold had lost $7 from last Friday’s close to trade at $1555, and silver nine cents at $18.01.
Gold’s open interest on Comex rose to just under 800,000 contracts on Thursday, yet another all-time record, and this was despite 32,227 missing contracts recorded as exchanged for physical in the four sessions to Thursday. It really is a high-stakes battle between the bulls and the bears and surely, the shorts must be very concerned because their tactics of using any good news to force the speculating bulls to sell have so far failed.
A key assumption for the bullion banks is that with respect to gold the speculators are always addicted to hopium, and therefore are predictable and can be controlled. But now that the world is showing signs of sliding into a recession, central banks are racking up the money-printing to prevent it. In the case of the US, and therefore for the dollar, the Fed is feeding temporary liquidity into the system through the repo market.