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Paper Gold Shorts are Switching Net Long


Some very astute thinkers have long said that the paper price of gold will remain low, until it doesn't. Meaning that marginal physical supply will dictate how low, and how long the shorting can continue. These same thinkers have also said that the commercial shorts, will switch long and get in-front. This is exactly what happened in the '70s. If we ignore the currency & inflation issues for a moment, today is very similar to the '70s, especially the last few weeks. 

Turd Ferguson posted a piece on Sunday regarding some very important changes to commercial net-short and -long positions on the Comex. This is exactly what Jim Sinclair has been saying about how the price-rise in the '70s happened. The shorts shorted until everybody capitulated and thought they would control prices forever, only to switch long, and make out like bandits by getting in-front of the crowd. 

Now if we bring the currency issues of today back into the picture. Quite likely the beginning of a change in gold prices will play the same, however another saying has been that 'this is the rally you may never sell'. Meaning that the next rally in gold, may co-incide with major currency related events, such as negative nominal interest rates, further bailout programs from major CBs, rising price inflation as a result of CB action, etc. 

Regardless of what happens in the currency venue, the current paper price of gold must rise, or there will be defaults. These days, nobody likes defaults and everybody except the little guy gets bailed out. Maybe a long awaited rally in gold is finally here?  



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