Maguire - New Buyer To Create Massive Short Squeeze In Gold -
“We will see $200 intraday moves..."
Today London metals trader Andrew Maguire warned King World News that a major European buyer is going to create a massive short squeeze in the gold market. He also spoke about what is going on behind the scenes in the war on gold. Below is what Maguire said in Part II of his powerful interview.
Maguire: “There are several factors that are going to wrong-foot this very large short position (in gold). There are several gaps to fill on the upside, and when it’s ignited it’s going to wipe out some of these shorts.
“We will see $200 intraday moves as this (short) position is unwound. It’s going to be a bottleneck. I’ll add here, Eric, that it’s primarily the US-based funds that are being led by the nose to sell the rallies here.
My information is that some long-term European money is being put to work. And we saw more of that (money) being put to work today. I am absolutely certain of that -- I have clear evidence of it. Eric, these are not soulless gold funds. These funds see gold as a hard-nosed investment opportunity.
They are rolling out of risk assets. Since the beginning of the year they are warehousing their risk asset profits into gold, and they are vaulting it privately -- not within the system. This is a big deal. That involves buying bullion one to one (fully paid for and privately vaulted).
There are also some other major structural dynamics at work this year. Let’s start with the LBMA losing their historical dominance over the global gold and silver markets, both here (in London) and in the US.
Eric, the last time we spoke, in December, we talked about a major push by the bullion banks to try to pick the producers’ pockets. And if you recall that (closed-door) BlackRock presentation that we went over by (LBMA Chairman Simon Weeks) of ScotiaMocatta, it was a good example of a ‘hurt and rescue’ strategy being pitched at these producers.
They were strong-arming them (the producers) to lockin marginal or low-cost bullion buy warning of prices hundreds of dollars lower. We heard (a price target of) $800 being hung out there (by LBMA Chairman, Simon Weeks) to incentivize them (producers) to come and do some forward selling.
Now, we’ve seen the aggressive manner in which these banks were forcing producer hedging in the last quarter of 2013. Well, these same banks were seeking to take forward delivery in mid-2014 at an unhedged plus-or-minus $1,200 price -- a price below most producers’ costs. But the key is the bullion banks are not hedging these forward buys.
This is a classic ‘hurt and rescue’ strategy employed by the likes of Goldman Sachs and ScotiaMocatta, forcing producers to sell to them at a discount in order to obtain the necessary financing. Now, in 2014, it’s no coincidence that Moody’s downgraded the miners last week, which plays directly into the bullion banks’ hands.
Talk about good timing (laughter ensues), with the threat of lower credit ratings and the squeeze on these producers already, it (the squeeze) has become even more aggressive. However, this move is backfiring. What’s the expression, Eric? ‘Pigs get fat, but hogs get slaughtered.’
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