Gyroscopic Investing

If anyone cares, we are seeing strong price movement on massive short covering over the last few days. Largest number covers in this timeframe in the last decade. All the industrials (miners ect) have very low short exposure. The existing shorts are from the speculators. They seem to be covering hard and fast.

What does this indicate?

[quote=stuper1]What does this indicate?[/quote]

The Duke brothers go bankrupt?

What Actually Happens At The End Of 'Trading Places'

Larshus wrote: If anyone cares, we are seeing strong price movement on massive short covering over the last few days. Largest number covers in this timeframe in the last decade. All the industrials (miners ect) have very low short exposure. The existing shorts are from the speculators. They seem to be covering hard and fast.

Thanks for the info, Larshus.  I am anxious to see what this means for the near-term price of gold.  If most of the shorts have been covered, then the price is expected to shoot higher?  Or if everyone is bullish, then a near-term peak has been reached (including today's rise of over 1.5%), so now prices will start to falling lower?  I guess we'll soon see....

There are 3 main groups of people that short in the gold market. Gold producers (industry), small specs, and large specs. Small specs are just that, pretty small. As a total they don't mean much. Large specs (speculators) are banks ,hedge funds, you name it. If you look at the long term movement of gold, Industry's correlation with shorts and inflection points of gold movement is higher than the specs. Why would this be? Industry shorts (sells forward production) when the price is high. they lock in profit. The do not short when the price gets too low because that would lock in loss if its below production price, or lock in very little gain.

Speculators on the other hand are momentum driven. They tend to short on downward pressure and go long on upward pressure. In other words, they tend to do the OPPOSITE of what the PP makes you do, while industry follows the same basic tenants of the PP (buy low sell high).

For months now industry has been taking off their hedges (letting their shorts expire and delivering, or buying them back) while speculators have been piling on shorts as the price has been moving down.

August 2 is the seasonal low day. Since right about that date you've been seeing short covering buy the speculators. Industry is already flat so they don't have to cover. When you have a lot of speculators panic and try and cover at the same time you generally see a movement up in price.

That's whats been happening for the last few days

Austen Heller wrote:

Larshus wrote: If anyone cares, we are seeing strong price movement on massive short covering over the last few days. Largest number covers in this timeframe in the last decade. All the industrials (miners ect) have very low short exposure. The existing shorts are from the speculators. They seem to be covering hard and fast.

Thanks for the info, Larshus.  I am anxious to see what this means for the near-term price of gold.  If most of the shorts have been covered, then the price is expected to shoot higher?  Or if everyone is bullish, then a near-term peak has been reached (including today's rise of over 1.5%), so now prices will start to falling lower?  I guess we'll soon see....

The specs are still very short. If the covering continues you'll see upward pressure on prices.