I know this. It's a longer-term picture. In the short term, the bullion banks (I believe, these are the commercials who are short, not the miners) are "naked" short in both OTC derivatives (they loaned some gold from central banks, and sold it) and comex. Their gold loans used to be in part covered by mining industry hedges. But these hedges are going down, as the industry is buying back around 700 tonnes per year. So - not anymore. They are very, very desperate. This is a large amount of physical gold short, around 5,000 to 15,000 tonnes, which can crush even the largest US bank. They won't be crushed, as, I believe, Central Banks will never see the gold they loaned.
Nevertheless, they are very short, desperate, and still quite powerful. Speculators are long futures and calls. Many large speculators make decisions to buy or sell based on technicals - so, as soon as the technical picture deteriorates enough, they may sell their futures positions. They don't even intend to take delivery.
On the other hand, even if some large portion of specs do intend to take delivery, gold will zoom past 500, since there is not enough gold on Comex to satisfy this demand, and commercials don't have it either. They are short cause.... they are short? The same situation, only worse, is in silver |
