Why Gold and Silver have declined

Kirbyanalytics subscribers received the following fast blast [in blue] appended below late Tuesday night, Jan. 25, 2011: The Thompson Reuters CRB index weighting has not changed since 2005. However, virtually all other commodities related indexes do rebalance in early Jan of every year. For instance the $CCI consists of 17 commodity constituents – with 5.88 % of the index allotted to each commodity. It rebalances in early Jan. every year. Silver’s RABID TEAR [out performance] last year ensured that it would be “cut back” to conform to its intended 5.88 % weight. Other commodities indexes do the SAME THING. Big Banks know this – they run or manage most of these index funds. Index funds dominate the trading universe more today than at any time in our financial history. Silver and gold are being PUNISHED – in a macro sense – in early Jan - from a commodity index re-weighting point of view – PRECISELY because they outperformed so much last year. This explains why silver is getting creamed so much more than gold – it way outperformed gold on a relative basis last year. It’s my understanding that this rebalancing window effectively closes with the expiration of Jan. Options [Wed]. If I’m correct in my thinking / analysis – this sell off is likely done and we are going to SCREAM HIGHER in both gold and silver Why I believe I’m right? We have just experienced a MASSIVE RECORD reduction in gold open interest reported Tuesday, Jan. 25, 2011 when COMEX gold open interest dropped 81,752 contracts to 498,998. The silver open interest drop, down 5368 contracts to 128,228 was very large, but nothing like what happened in the gold pit. Apparently – the biggest one day drop in gold O/I prior to day was 28 thousand and change back in Nov. 2009 This tells me that the BIG BANKS [the guys who are naked short all the gold] us...

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