The Gold War At The COMEX Could Lead To A Short SqueezeSA article by 'Atlas Grinned';
The Gold War At The COMEX Could Lead To A Short Squeeze Summary
Open interest in gold futures on the COMEX is at record highs. COMEX Gold Contract (GOLDS:COM)1,488.97, Up $3.17 (0.21%) As of: 12/23/19 11:04:38 pm
The last two times this happened in 2011 and 2016 it marked major tops in gold.
That could be the case this time, but with gold equities solidly outperforming the metal during this latest correction, gold may head higher despite record open interest this time.
If that is the case, we could be at the precipice of a major gold {{{short squeeze}}}}.
short squeeze is a situation in which a heavily shorted stock or commodity moves sharply higher, forcing short sellers to close out their short positions and adding to the upward pressure on the stock. Short sellers are being squeezed out of their short positions, usually at a loss. Short squeezes are generally triggered by a positive development that suggests the stock may be embarking on a turnaround. MyTakeaways from article:
"...gold has been in a mild correction for three and a half months now. Corrections like the one we’ve seen since September almost always lead to a fall in both speculative long positions and commercial shorts on the COT reports. Speculative positions are money managers, hedge funds and the like that buy gold for speculative purposes. Commercials are companies that use gold for industrial purposes. This time the (Gold futures) fall is not happening..." "...I believe the short squeeze scenario is the correct read here for the following reason. We are seeing the same ongoing bullish pattern since 2015 in the interplay between gold equities and the underlying metal. That pattern has only been strengthened by the latest tepid correction, which has not seen gold equities correct much. Some are even heading to new 52-week highs...." "...Here we see that despite the fall in the price of gold since September, gold stocks are on the verge of outperforming gold during this down leg. That could mean that the gold price is being hit by shorts on the COMEX, which may be why open interest is so high..." "...how gold performs in the short term should send a very clear message as to whether this bull market has a long way to go, or if it is only a blip higher in the context of a wider bear market since 2011..." Plan for it to go up, (but prepare for it to go possibly go down) Link to full article here: https://seekingalpha.com/article/4313780-gold-war-comex-lead-to-short-squeeze Be nimble , alert & patient..Cheers and have a Merry Christmas!