A GIGANTIC SHORT POSITION IN GOLDOil is powering up and up as the dollar is powering down and down, which shows that All Is Right With The World And God Is In His Heaven, because that is exactly what you would expect. Today it hit $42 a barrel again, on its way to $50 by year end, according to guys who say they know what they are talking about, and perhaps we should listen to them, as I obviously have no idea what I am talking about.
The part that one would NOT expect is that gold is not, also, powering upward. This apparently anomaly is perhaps explained by the central banks manipulating the market to suit themselves and cover their nasty butts, as they have, over the years, leased all that gold to make a few bucks for themselves. And the guys who leased it sold it, figuring that they could replace the borrowed gold later. So there is a gigantic short position in gold. And you know what happens when there is a big short position in something: the shorts get squeezed if the price goes higher. So to keep the guys who borrowed all this gold from folding their tents and skipping the country, sticking the central banks with the bill, the central banks have a vested interest in manipulating the market to keep the price low. Given the general trustworthiness of government, it sounds right to me!
Jul 27, 2004
Richard Daughty
For The Daily Reckoning
Richard Daughty is general partner and C.O.O. for Smith Consultant Group, serving the financial and medical communities,