Doc asked me last minute to fill-in for Eric Dubin, who’s M.I.A. somewhere on the shoreline of southern France, on Silver Doctor’s Metals and Markets weekly podcast. Among other topics we discussed why the current trading action in the precious metals paper market feels very similar to trading in the spring/summer of 2008 – ahead of the great financial collapse crisis and why the Fed/bullion banks are making it obvious that they seek to scare investors away from buying precious metals with their “shock and awe” price-takedowns.
But one big difference between now and 2008 is that these “zip-line” vertical drops in the paper are being met with aggressive buying from the eastern hemisphere physical buyers, thereby limiting the size, intensity and duration of the price-hits.
As of the latest COT report release Friday which details the constituent trader positions through last Tuesday, the trader positions are moving toward a highly bullish set-up for gold and silver. In silver, the hedge funds are now net short silver futures and the swap-dealer segment of the bullion bank positioning is net long. In gold, the hedge funds have aggressively reduced their net long position and the swap dealers are long to a relatively large degree. Historically, this position shift has preceded major bottoms.