Thursday, July 26, 2018

"Gold Bears Press Bets In Record Numbers"

What we want is death by boredom, like that 1999 - 2002 period when Britain sold its gold:

We've been babbling about an ultimate bottom of $875 for the shiny stuff, ever since the Financial Times' Izabella Kaminska pointed out an interesting correlation in her post dated December 7, 2012: "Capping the gold price" which we finally caught up to in January 2013's "Spot Gold Down $21.80 as HSBC, Credit Suisse Lower Forecasts (GLD)".

Three months later, April 2013 we followed up witth "Gold Hammered to 15 Month Low on Heavy Technical Selling, Weak Long Liquidation": 
Woulda, coulda, shoulda.
If I had been paying attention when Izabella Kaminska wrote "Capping the gold price" , I'd have more chips to play with.
Alphaville posted it on December 7, 2012, five days before the $1715 intermediate term top.
Instead it took me four weeks to get to it, Jan. 3, with "Spot Gold Down $21.80 as HSBC, Credit Suisse Lower Forecasts (GLD)"
Here's the trading from that day:
As you can see, my thought process was something akin to "Saaaay, something appears to be happening with gold". We just hadn't been paying attention.
On Feb. 15 with "Gold Is Approaching a Waterfall Decline" at $1627.90 I finally got around to posting the next target:
The next area of support is all the way down at $1525 from May 2012.
Better late than never, right? Right?
Well, gold got down to that $1525 and quite a bit lower, working from memory $1050 in December 2015 rings a bell and we pop up from time to time with the $875 target. Here's July 2015's
Commodity Investors And the Kübler-Ross Model of Grief (or why gold could go lower than our $875 target)

And December 2015's
"More Gloom & Doom For Gold & Silver In 2016 – Deutsche Bank Outlook"
We've been looking for $875 since 2012 and frankly, the delay is cutting into annualized returns....

December 2014 
"Strong Second Half Of 2015 For Gold - Financial Astrologer Mahendra" 
Most active (Feb) futures $1177.50 down $2.30. We continue to target $875 although it is getting boring to continue typing this....

March 2014 
Gold On Its Way to $875 
$1311.20 last.
We've been blowing this horn for a while*:

So, we're not some ursa-come-lately, no sirree. But enough of the past, on to the headline story which scares the short out of me:

ZeroHedge, July 26, 2018:

Gold Bears Press Bets In Record Numbers
Gold shorts are near a record high as saturating bearishness sets in.
The Wall Street Journal reports Gold Market’s Slide Brings Out the Bears.
Investors are placing a record number of bets that a protracted slump in gold prices will continue as the metal is punished by a strengthening U.S. dollar and rising interest rates.
Hedge funds and other speculative investors have increased wagers that gold prices will fall over the past five consecutive weeks, pushing them to their highest level ever during the week ended July 17, according to Commodity Futures Trading Commission Data going back to 2006.
As speculative investors have turned bearish, money managers began pulling money from gold-backed exchange traded funds. Investors yanked more than $2 billion out of gold-backed ETFs in June, the largest monthly outflow since July 2017, World Gold Council estimates show. Demand for American Eagle gold coins, a proxy for physical demand, has also been weak.
“This suggests that short sellers are pressing their bets,” Sundial Capital Research’s Jason Goepfert wrote in a note to clients last week. Typically the opposite happens when gold prices are bottoming out.

Horse in Front of the Cart

That article is an accurate assessment of what is happening....MORE
Front futures $1224.30 down $7.50.

For more on Chancellor of the Exchequer Gordon Brown and the so-called "Brown Bottom" here's 2010's: 

This is How a Competent Central Bank Does it: Swiss National Bank Seen Selling Euros (EUR/CHF) 
It sure beats the hell out of the Gordon Brown approach.
On May 7, 1999 Britain's Chancellor of the Exchequer, decided to sell 60% of the country's gold reserves. The price of the shiny stuff had been in decline for nineteen years, falling from it's January 1980 high fix of $850 (I seem to remember an $875 print in Hong Kong, but it was a long time ago) to $282.40 on that May Friday.
Not only did Brown decide to sell after a 67% decline, HE ANNOUNCED HIS INTENTIONS IN ADVANCE.
And 2012's
"Revealed: Why Gordon Brown sold Britain's gold at a knock-down price"