Natural gold market prevails

Gold and silver are now up 10.1% and 17.2% in USD spot terms and an even better 12.3% and 19.6% in Aussie dollars for the year.  From a technical perspective they are both in ‘overbought’ territory.  They are also flagrantly defying the loose inverse correlation with the USD which hit 94.5 last night.  The last Commitment of Traders report from COMEX showed the big banks had large short positions on both metals (bets on a price decline).  These guys normally have the ability to spook a market down and get out of their shorts for a profit or in such a rising market, limit their losses.  Last night was the perfect opportunity to do so.  The old “buy the rumour, sell the fact” investment adage with respect to the ECB announcement last night, combined with the surging USD put it on a platter for them.  But it didn’t happen.  Gold and silver both rose around another 1% last night.  This has the feeling very much like the natural market has taken control.  There are a growing number of sophisticated investors who are putting some serious money into the safe haven of precious metals.  To add to the situation, at a time when silver is making substantial price gains, there has been almost 1000 tonne of real metal removed from the ETF (exchange traded fund) SLV since December.  So a fund that supposedly holds metal in accordance with price is seeing their inventory reduce on a rising market!?  ETF’s are a paper promise.  Nothing beats real physical bullion.  It has been a big week and if you don’t normally listen to our weekly wrap radio, this is the week to start.  Just click here.