by John Rubino, Dollar Collapse:
For as long as most gold and silver investors can remember, the paper markets — that is, banks and speculators placing bets with futures contracts — have set the price of those metals. And within the paper markets, “the commercials” — fabricators and big banks — have time-and-gain fooled speculators like hedge funds into piling in (both long and short) at exactly the wrong time.
The data series that tracks this relationship is known as the commitment of traders report (COT), and it’s been a pretty reliable indicator of precious metals’ short-term trajectory.
Right now that’s bad news for gold and especially for silver, because the speculators — who, remember, are usually wrong at the extremes — are exuberantly long the latter, implying that the silver recovery is due for a correction. Here’s a recent piece from well-known metals trader Dan Norcini:
By that I mean, it just keeps getting scarier and scarier.My guess is that every speculator on the planet is long silver/short gold or outright long silver.
That of course is an exaggeration but I am not exaggerating when I categorically state that the silver market is a train wreck just waiting to happen. As I have said before, and will say so again – I would rather miss any more upside in this market than get long now, not with a trade so lopsidedly jammed with speculators on the long side. I will leave that for the daredevils and others who like driving the stagecoach as close to the edge of the mountain pass road as they possibly can.
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