It appears the physical gold and silver leaving Comex may never return.
King World News has just released a new audio interview (LINK BELOW). For now…
Bear Squeeze Pauses
June 21 (King World News) – Alasdair Macleod: The shorts on Comex took the day off yesterday, being the Juneteenth National Independence Day. But their problems continue nevertheless…
In European trade this morning, gold was $3350, down $85 from last Friday, while silver was $36.00, down 30 cents after a high of $37.31 on Tuesday. Yesterday was a US public holiday, so Comex dealing later today should be quiet. And it was interesting that in the absence of US dealing, gold and silver declined.
In recent trading sessions, gold and silver have trended higher in US trading hours, and a lack of follow-through has been evident in Shanghai. This reverses the established pattern of greater interest shown in Asian markets than in London and New York. That point made, silver appears more exposed to a selloff than gold as the two charts of price and Comex open interest demonstrate.
The two contracts are behaving differently. Gold has been consolidating close to all-time highs while Comex open interest, a good proxy for an overbought—oversold index has remained low. This unusual relationship strongly suggests a squeeze on the shorts, principally bullion bank trading desks. More on this below.
Meanwhile, silver is in a more conventional bullish relationship with the price being driven by buyers with open interest rising into overbought territory. But a look at the commitment of traders’ statistics tells us that the three individual long categories (managed money, other reported, and non-reported) are not yet in overbought territory, implying they have further buying power.
Silver is considerably more volatile than gold, and traders must factor this in. However, the technical chart is impressive.
The pennant pattern is typical of a fast-moving market catching its breath before continuing in its underlying direction. A minimum projection is for a subsequent move equal to the preceding move, which started in January 2024 at $22 and ended at $35 in November. From its breakout at $34.00, that gives a target price between $46—$50.
Gold’s chart is also bullish, but with a different pattern.
This month-long consolidation is finding solid support at the 55-day moving average. Cautious investors will worry that a consolidation back to the 12-month MA is likely and therefore hope for the opportunity that presents. But they do not reckon with the oversold situation in Comex futures, which limits that possibility.
This week’s trading has confirmed that Comex has a problem, because gold and silver tend to rise in its trading hours. In a research note, the ECB confirmed what this column has been saying for months: the problem is in stand for deliveries. Since President Trump was elected, 817 tonnes of gold has been stood for delivery, and 8,552 tonnes of silver. The surge in net gold deliveries into Comex warehouses at 645 tonnes to date doesn’t even cover these obligations, let alone any undelivered stand for deliveries not withdrawn from Comex warehouses. In silver’s case, net deliveries amount to 7,146 tonnes, a shortfall of 1,406 tonnes.
Physical Gold And Silver Leaving Comex May Never Return
Perhaps traders on Comex are waking up to the risk that gold and silver walking out of Comex warehouses may never return. In which case, if London and Switzerland want their gold back to complete their arbitrage trade, where is it going to come from?
In the past, central banks and the Bank for International Settlement have intervened to smooth out market backwardations. But for the central bank community, possession of bullion has become more important than helping out the paper markets: talk to those who witnessed the recent withdrawals for the Bank of England’s vaults, which may or may not have included some of their gold under lease.
Those stand for deliveries appear to be gold and silver disappearing from the physical liquidity upon which the paper house of cards is based. This being the case, the fat lady is yet to sing.
As a footnote, don’t rule out the possibility that the Americans will bomb Iran over the weekend when financial markets are closed. But no one in capital markets seems to care…
JUST RELEASED!
James Turk discusses what is happening in the gold and silver markets and much more CLICK HERE OR ON THE IMAGE BELOW.
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