Strictly: Drilling II Message Board

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Strategies & Market Trends : Strictly: Drilling II

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To: longdong_63 who wrote (27536)	2/5/2003 4:47:18 AM
From: jimsioi	Read Replies (2) of 36161

The question of the Commercial Shorts.. The question I have about the shorts is what part of their number is conducting legitimate hedging operations of inventories and forward sales? If their number is significant relative to the total, and they are not actually taking a net overall loss, they probably will not be forced to cover at any given point but would rather be increasing their short position as business in Gold increases the amount of gold they hedge. . Over time the share of the total commercial short interest pie be held by hedgers I'd expect to increase. I think we "gold bugs" believe that the commercials are not primarily hedging interests but derivative players where they indeed have a loss on their net position...ie...they are naked short. If they begin to cover in mass and there isn't another institution ready to take over their position say 100 dollars higher, and they have to buy it in....I'd bet we could see a several hundred dollar spike...defaults and exchange closures...Just like the good old May Maine Potatoes.....

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