Tech Analysis of Precious Metals Miners

[denmo83]

Dan Norcini on the latest COT:

Houston's Dan Norcini:


The Silver Commitments is pretty amazing. I was under the impression that the funds were driving the silver market since that is what is being regularly reported in the wire feed stories. Lo and Behold, this past week the long funds were actually getting out and reducing their long positions while the short funds were adding to theirs. It looks like some of them must have taken some money off the table when silver spiked 850 on Friday, April 2.

All in all we had total fund selling of some 4000+ silver contracts thru Tuesday.

What is more interesting is that in the last two weeks we have seen a reduction (not much - roughly 2500 contracts - but a reduction nonetheless) in the commercial short category. It appears that some in that category are throwing in the towel or at least beginning to lighten. It could very well be that the gig is coming to an end in there and the rats are thinking about abandoning ship. This could turn out to be an extremely important inflection point in silver. If the commercial perma-shorts begin to cover in quantity it will portend tremendous upside for silver. The question will then be, who will sell to them on the way up? Silver will have to run to a price that actually clears the market and where that price is, is anyone's guess.

Open interest still continues to rise in the Silver pit and any funds that were long and got out were replaced by small specs and new commercial longs. I personally would like to see the funds continue to add to their longs as that would betoken continued fund interest and commitment to silver. One of the indicators that copper was slowing its recent ascent was the reduction in the fund long positions in there. Apparantly, some of them decided that the copper rally had been so good to them that they had better take some money off the table. When they did, some of the would-be shorts who were looking for a short term advantage tagged the market pretty good and drove it back down for a brief, but hard correction. It has recovered considerably since then but has yet to better its yearly high. We will have to see if the same pattern develops in silver or if the investment demand for the metal is too strong to allow even a setback of any depth.

In regards to gold - really nothing to say except "Groundhog Day." Same ol', same ol'. The commercial category sold some 18,000 contracts this week including the commercial longs who sold off some positions and the cartel which continues to flaunt its elitist attitude that declares the gold market to be its own private sand box. The goons added 11,348 brand new shorts! Again, the bulk of the selling is due to this category. Apparantly some of the small specs are becoming born again Prechterites as they put on new shorts by a 2.5 : 1 ratio of shorts to longs. Still, in the general scheme of things their selling is neglible compared to the cartel. Once again we see the same thing we have seen for years now. Without the constant, never ending selling of the gold cabal, the gold price would have soared long ago.

I challenge any of the naysayers who continue their asinine denial of the facts by dismissing GATA and its supporters as a bunch of kooks and conspiracy nuts to state the reasons that the commercial short category continues to pile short upon short when the vast majority of the mining industry is moving or has moved to a "no-hedge" policy or at the bare minimum reducing the size of their hedge book. Let them declare the reason that the bullion bank cartel of Morgan, Goldman, et al, have for bona fide short hedges of this magnitude. The simple truth is that there is none. The only reason these by now "obscene" short positions continue to escalate is to slow the rise in the price of gold so as to avoid drawing the attention of the public and the excitement that would inevitably follow. Translation - it is for rigging the price of gold. That is the only reason and anyone who denies that is best ignored and relegated to the category of archaic and incompetent and forfeits the right to any credibility in regards to gold in my opinion.
Dan Norcini
[e-mail]