"...However, the most interesting aspect of the huge run-up in prices on Wednesday was the fact that gold o.i. only rose 809 contracts! The biggest one day price move in gold in history and that's all? Even more incredible...silver o.i. fell a stunning 4,432 contracts on a $1.50 price move to the upside! If these numbers are true, then this could have been a short covering rally on a massive scale in both metals. There could also have been spreads lifted as well, but it's a strange time of month to be doing that. I wonder if it was the bullion banks themselves covering their shorts...shorts they couldn't cover on the way down, they're covering now...and that's why the price rallied. It could have been...and that's why nobody showed up to stop them. They were the buyers! Is this a fact? No, but it jibes with the open interest numbers. If this is true, it's hugely bullish. I'll report Thursday's o.i. on Saturday. Too bad this info won't be in the COT until the 26th.
...Despite the gyrations on the COMEX and Globex, which are exchanges on which paper gold is traded, demand for physical bullion and coins persists at very high levels, a situation that will serve to underpin spot long-term, regardless of short-term fluctuations.
“People are panicking right now,” said Wall Street gold dealer Jules Karp, who sources coins for clients of the Street’s largest banks. “They're afraid for their money,” Karp added, calling demand “unbelievable.”
It’s the same elsewhere. New Orleans-based Blanchard and Co., the largest U.S. precious-metal retailer, reports that gold sales to new clients have jumped more than sixfold in the past three days.
“People are looking for answers,” said David Beahm, a vice president at Blanchard. “People want to protect their wealth and their assets, and gold is the best way for them to do that.”
That’s a trend in motion for sure. Gold aficionados have proven correct that “an overwhelmingly vast and complex pool of nested financial derivatives would ultimately result in cascading defaults and ruin for major portions of the banking system,” wrote Citigroup analyst John Hill, and he added that, “Frankly, we're surprised that gold is not already at $2,000 per ounce.”
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