After another wild trading week, it appears that the swaps (bullion banks) have covered a massive amount of gold shorts.
March 6 (King World News) – Alasdair Macleod out of London: Tonight’s Commitment of Traders report confirms what we guessed: that the Swaps (bullion bank trading desks) clawed back a massive 23,351 net shorts reducing their outstanding position to 135,308 contracts. The monetary effect is shown in our next chart. Net shorts are now in the hole for $23 billion, down from $42 billion in January.
Bullion Banks Cover Massive Amount Of Gold Shorts
This is important, because so long as the bullion banks are trapped in these inflationary times, they cannot permit the gold price to run away. Instead, they have done a good psychological job to get the Managed Money category on the run. These are the hedge funds who almost never take delivery.
The next chart shows their net position.
Managed Money Has Liquidated Nearly All
Of Their Net-Long Gold Positions
Since last Tuesday — the date of the COT report, doubtless their net longs have reduced even more, perhaps to 25,000. The reason they will have sold so heavily is a combination of charts with bearish moving averages, and soaring bond yields. The 10-year UST has shocked us all, up next.
Next week will likely see continued attempts by bullion banks to close down more shorts. Meanwhile, the Fed seems reluctant to implement yield curve control and to extend relief from the supplementary liquidity ratio, which penalises banks extending their balance sheet to accommodate bond holdings. That is due to expire at the end of this month.
The banks are calling the Fed out on this, and the shorts in the US Treasury market have driven repo rates to minus 4.25% in the scramble for deliverable bonds. If the Fed doesn’t capitulate on these issues, there will be a banking crisis not just in the US, but in the eurozone where bond yields are also rising sharply (ie bond prices collapsing). If the Fed does capitulate, it is game on for hyperinflation.
For gold and silver these are extremely volatile conditions, but by default owning physical is the only place to be…to listen to Alasdair Macleod discuss the gold and silver takedown and what to expect next CLICK HERE OR ON THE IMAGE BELOW.
Gerald Celente discusses the gold market and a coming huge bounce as the US prepares to open up the economy CLICK HERE OR ON THE IMAGE BELOW.
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