Friday's morning action in gold has been at once both terrific and frothy,
wonderful and scary, and redemptive and soothing, says precious metals expert
Michael Ballanger.
My hedges are all getting blown to smithereens with the miniscule damage
to my net worth being vastly outdone by the gargantuan damage to my ego as
the power of the physical market is beating on the Commercials like rented
mules and rag-dolling gold bears like common farm animals. The CNBC crowd are
all taking complete ownership of the "gold trade" and everyone here
in Toronto is scrambling for last-minute hotel rooms for PDAC inclusion.
Notwithstanding the fact that Zerohedge posted the chart seen below under the
headline, "Futures Flat Ahead Of Payrolls As Gold Continues Surge After
Entering Bull Market," and despite the fact that Blackrock suspended issuance
of new shares of its gold ETF because "it holds physical gold as an
asset," the world is alive with sound of music of a different tone and
pitch-the melody we are hearing from the Crimex floor is actually the sound
of a possible short squeeze in the making, and Blackrock knows damn well that
there is no physical gold in any size ANYWHERE to be had and hence the halt
in new Blackrock Gold ETF paper.
. . .Everyone and their brother have my inbox inundated with emails with
one thousand reasons why the gold market is going straight, without
interruption, without a rest, with no need for any sort of breather or pause,
to $10,000 an ounce and how the big bad banksters are going to cause a system
reset where ATMs don't work and mobs invade our homes. Seriously folks,
wasn't it only six weeks ago that the Sovereign Wealth Funds were dumping the
gold and silver miners as if they were Fukushima waste ponds? Well, maybe
$10,000 gold and social anarchy is in the cards for some time down the line
and while I certainly don't hope for it, I think that today's action was
rather suspect with gold hitting a feverish $1,280.70 and the HUI an
oxygenated 182.73 only to close at 171.96 so THAT, my friends is a true
"reversal day," hitting a new high for the move then reversing and
closing down on the day. You all know that I don't trust technical analysis
in trading precious metals because of the constant shenanigans with margin
rates and deliveries and the like but one thing is for certain, you must
respect reversals and I will say that here at 3:25 p.m. before the COT is
released in a few minutes. . .
The COT Report:
The COT has once again sounded the alarm for CAUTION as the short position
held by Commercials is now 5,431 contracts LARGER than in mid-October of last
year just before they took it down $150 per ounce in six weeks. Now I know I
sound like your nagging mother from years ago (when you were reading comics under
the covers with a flashlight instead of "going to sleep" as you
knew you should) but I deeply apologize for departing from my historic role
as a card-carrying, drum-thumping, bugle-blowing BULL on gold and gold miners
but the last time you all heard me warbling like an in-heat oriole in the
Spring was in early December after the Commercials reported a short position
of only 2,911 contracts, one of the lowest numbers recorded EVER by the guys
that (allegedly) act for the producers of gold around the planet. More
importantly, they also act for the holders of the largest cache of
above-ground gold on the planet, the Central Wanks-er-Banks, who happen to
own the lawmakers (Washington) and the law enforcers (SEC) and the regulators
(CFTC) whom all conspire to promulgate the myth that the U.S. currency unit
will preserve wealth better than one ounce of gold and/or silver.
So, when I get emails with three words: "SCREW the
Commercials!!!" all typed in caps with little smiley faces all plastered
within the body of the email, I'm sorry-I detect a noticeable uptick in not
only bullish sentiment but also a new-found cockiness in gold bulls, many of
whom I have never heard from before, that tells me that they are the very
"newbies" that always get laid out like a Pakistani throw rug after
monsoon season.
What I was looking for was a noticeable downtick in the Commercial short
position because it would have confirmed that they were covering into a
RISING market, ostensibly "on-the-run" from the majestic power of
raw, physical demand for the real thing, actual gold instead of the phony,
synthetic doppelganger that can be substituted by the Crimex Criminals in the
wink of an eye (and nod of an under-the-barstool bag of Franklins) at the
direct expense of the gold investor, pension funds, university endowments and
one Michael J. Ballanger, all of whom carry varying importance in the grand
scheme of things, right?
"SCREW the Commercials"? I severely do not think anyone should
attempt to trade one's own or other people's money with an attitude as brazen
as that and while no one other than I would luxuriate more in the silky-sweet
satisfaction of a Commercial Signal Failure, I have to respect them and
protect the capital accordingly by assuming that the Evil Ones still own the
paper price of gold and silver. To do otherwise is sheer folly. Nevertheless,
it was a great week to be a player in gold and the gold miners and despite
the late day reversal in both, precious metals portfolios have been blessed
by the final hibernation of not just a bear, but one mother of a Kodiak bear
and based upon the amount it consumed between March of 2011 and today, I
think it will be a very long period of slumber for this well-fattened beast.
While I bid him goodnight, I will have my helmet on at all times because
you just NEVER know when and if he'll opt for one last midnight snack. . .
Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University
where he earned a Bachelor of Science in finance and a Bachelor of Art in
marketing before completing post-graduate work at the Wharton School of
Finance. With more than 30 years of experience as a junior mining and exploration
specialist, as well as a solid background in corporate finance, Ballanger's
adherence to the concept of "Hard Assets" allows him to focus the
practice on selecting opportunities in the global resource sector with
emphasis on the precious metals exploration and development sector. Ballanger
takes great pleasure in visiting mineral properties around the globe in the
never-ending hunt for early-stage opportunities.
Disclosure: This article does not constitute investment advice. Each
reader is encouraged to consult with his or her individual financial
professional and any action a reader takes as a result of information
presented here is his or her own responsibility. By opening this page, each
reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer.
This article is not a solicitation for investment.
From time to time, Streetwise Reports LLC and its directors, officers,
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articles and interviews on the site, may have a long or short position in
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All images/charts courtesy of Michael Ballanger
