by Alasdair Macleod, Gold Money:
In both cases Open Interest has been rising, indicating a substantial and growing short position, though silver’s fell sharply in heavy volume on Wednesday on technical grounds: it appears that someone rolled 6,000 contracts out of the December future into an option position. The other side of the precious metals trade is a strong dollar, strong equities and robust bond markets, which taken all together indicate that portfolio managers are universally bullish and ignoring risk. Time will tell if this Panglossian view is justified.
Silver has been particularly vulnerable, and the gold/silver ratio now stands at almost 75 times. This is not unprecedented but can be regarded as extreme. The result is retail demand for silver coins and bars has escalated, in the former case leaving the US Mint sold out of silver eagles. Demand for gold coins and small bars has also taken off with dealers in Germany and Austria reporting brisk business. Demand in China and India has also increased noticeably in recent weeks, and the Shanghai Gold Exchange reported this morning deliveries of 47.45 tonnes in the week ending 7th November, almost double the rate in July.
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