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December 30, 2020 – Hanging Tough or Hanging On?

Feedback from a couple of subscribers this week provided much food for thought. Their thoughts were similar and revolved around the plight of the 8 big shorts, including whether they could sustain continued big losses and continue avoiding publicly reporting them. Let’s see if I can unbundle the questions. If you’ve noticed, I stopped reporting on the open and unrealized portions of the losses and the realized and closed out losses for two reasons. One reason is that US tax regulations deem all open and unrealized losses (and gains) for derivatives (futures and options contracts) be marked to market as of the end of December (or designated alternative fiscal) yearend. At that point, there is no distinction between unrealized and realized losses or gains. In addition, as much time as has rolled by since the big shorts’ losses started to accrue (in the summer of 2019), the continuous roll over…

December 28, 2020 – COT Report Comments

In a twist I don’t recall seeing in my many years of analyzing Commitments of Trader (COT) reports, this week’s report was cutoff on Monday, December 21, instead of the usual Tuesday, given the holiday schedule. While unusual, it doesn’t really matter in the long run, as the data will continue to get reported in the normal fashion (but perhaps with an earlier cutoff date in next Monday’s release). Where it does matter this week, is because there was a pretty sharp selloff on Tuesday, December 22, I was factoring in managed money selling and commercial buying on that day in COMEX gold and silver futures (which wasn’t included). Therefore, the data reported today likely reflects a bit more deterioration than I was expecting, but not excessively so and had I known the report would exclude the trading on Tuesday, I would have expected close to the deterioration actually reported.…

December 26, 2020 – Weekly Review

In a holiday-shortened and subdued trading week ended Thursday, gold and silver prices ended the week slightly lower, with gold off by $3 and silver down by 5 cents. Still, it was second highest weekly close for gold in more than a month and the second highest close for silver in more than 3 months. There was no change in the silver/gold price ratio, which remained at 72.5 to 1, also the second highest weekly close in three months favoring silver. With four trading days remaining for 2020, the 8 big shorts saw a scant measure of relief in their total losses by $100 million to $13.3 billion. There’s no way (that I know of) to predict where gold and silver prices will close out the year next Thursday, but unless an unexpectedly large selloff occurs over the next four trading days, the 8 big shorts will have experienced their…

December 23, 2020 – Important Distinctions

I did an interview with Chris Marcus, from Arcadia Economics, the other day that might be of interest. As might be expected, I harped on the concentrated short position in COMEX silver (no surprise to subscribers), but in listening to the interview afterwards, a point made by Chris that I didn’t comment on gave me food for further thought. https://www.youtube.com/watch?v=hQhqn5zt41s Chris raised the issue of the Bernie Madoff scandal, which broke open this month 12 years ago, in 2008. That year was quite the year, seeing as it began with JPMorgan acquiring Bear Stearns and ended with the Madoff scandal. As Chris correctly mentioned, the regulators, in the form of the Securities & Exchange Commission, were warned well in advance of suspected illegality at Madoff’ s investment firm by Harry Markopolos. Chris’s point was that the SEC ignored the warnings, much like the CFTC has ignored the repeated warnings of…

December 19, 2020 – Weekly Review

Gold and silver prices surged this week, with gold up $43 (2.3%) and with silver up a much sharper $1.92 (8%). Gold closed at a one-month high, while silver closed at a three month high. As a result of silver’s sharp relative outperformance, the silver/gold price ratio tightened in by nearly 4 full points to 72.5 to 1, the strongest valuation for silver in three months. The sharp and I would say sudden surge in silver relative to gold is somewhat different than what has occurred on the price leg up that started in the summer of 2019, in that up until now, silver has generally played “catch up” to gold for the most part. Yes, silver did surge this past summer, gaining a fairly quick $10 in a matter of weeks, but as you’ll recall gold had been leading the way and the burst in silver prices had all…

December 16, 2020 – The View From 30,000 Feet Up

It’s easy to become intensely focused on anything you develop an avid interest in and that certainly includes silver for me (and most of you). Combined with modern technology, one can easily slip into paying attention to every price tick and chart squiggle. The problem with this, of course, is that an extremely short term focus can work against long term investment results and it is the long term where investors stand the best chance for real success. That’s why it’s important to try and fight to maintain a long term perspective, measured in years, not days, weeks or months – like the perspective one gets by looking down from a great height. Sure, this can be easier said than done on a daily basis, but fortunately it’s not terribly hard to do once in a while. So let me summarize my own personal perspective on silver, not from 30,000…