Reports on commitment of traders and bullion banks’ participation reveal that the sistema is strongly positioned to take out slingers (speculators).
Banker Participation Report
The latest Banker Participation Report is a bullish indicator for the ages. Foreign banks haven’t changed much, but U.S. banksters — and that would include JPM — are net long about 4.6 million ounces.
Chart source: BPR July 8
The last report on June 8 was bullish enough to get me highly aggressive on gold. At the time, the banker complex was long gold for the first time. Now they have added another 1,488,000 ounces.
Chart source: BPR June 8
Commitment of Traders
The big news is that commercials added about 21,400 new contracts long. In the last three weeks, they’ve added nearly 40,000 contracts, or 4 million ounces gold.
The commercials took the long side as producers reduced hedges by 4,076, to 15,190 from 19,266 last week. The producers are simply not delivering sufficient gold to the Comex. No wonder Comex registered inventories are at an all-time low. Swap dealers picked up the pace of their longs with a net 8,356 more in the kitty.
The CoT data shows the large-spec money managers net shorted gold by an additional 8,905 contracts toward the short side in the week ending July 2. Uner the CoT report’s category called “other reportable,” 4,496 contracts were added to the short side.
Given the extreme off-side trading and indiscriminate selling (actually shorting), I have to ask: Who are the rogue-trade slingers in the spec complex? Is it another Enron or another Long Term Capital Management?
London Gold Forwards
If that wasn’t enough, the rates for the London Gold Forwards (gold for USD swaps) have crept lower and lower into negative territory: (quotes) 1 month -0.065%; 2 month -0.043%; 3 month -0.030%. Simply put, it means gold — not dollars — is in heavy demand. This presages a powerful rebound in gold’s price, much like in September 1999, March 2001 and November 2008.
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