by Dave Kranzler, Investment Research Dynamics:

The sell-off in the precious metals sector since the election has nothing to do with Trump’s victory. That thesis is based on the price-action in the precious metals sector when Trump was elected in 2016. But the sell-off that year followed a move straight up starting in January 2016 that lasted nearly eight months. The sector began heading south in late August that year. It was going to at least undergo a correction in spite of Trump. There’s some other factors back then that are not present currently.

The current sell-off has more to do with the fact that, after a big move higher since the beginning of August the sector had become extremely overbought technically. The Comex banks were shorting a massive amount of gold and silver contracts to feed the appetite of the momentum-chasing hedge funds and CTAs. The bank short position became extreme as did the managed money long position. It was the perfect set-up for the banks to implement what I call a Commitment of Traders open-interest liquidation operation. Using a technically overbought condition in the sector, along with a torrid rally in the dollar, the banks coerced selling by the hedge funds/CTA. The sell-off was almost exclusively during Comex floor trading hours – almost none of the downside price action occurred during physical market trading in the eastern hemisphere.