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Gold/Mining/Energy : Blue Chip Gold Stocks HM, NEM, ASA, ABX, PDG
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To: shakes who wrote (31126)9/5/2011 7:05:30 PM
From: shakes6 Recommendations  Read Replies (1) of 48092
 
Ref. Ed Steer:

Here's the extensive quote from Ted Butler, as posted on the GSD on Sept. 1st:

Here are a couple of free paragraphs from silver analyst Ted Butler's mid-week comments to his subscribers. I consider this to be one of his landmark commentaries since I began following his work over a decade ago...and I wish I could post the whole thing. I told Ted that on the phone yesterday...and he's seriously considering putting it up it in the public domain. If he does, it will be posted in this column immediately.

"Restating what I feel is the obvious; the dramatic gold rally was caused by aggressive buying by the group of speculative traders which are classified as commercials by the CFTC. Many make the mistake of assuming that just because these traders are classified as commercials that means their trading is purely for legitimate hedging purposes. Nothing could be further from the truth, as the bulk of their trading is speculative in nature. Therefore, while it would be technically correct to say that the gold rally has been caused by speculative buying, most would assume that meant new buying of long positions by easily-identified speculators such as hedge funds and momentum traders. That is definitely not what has transpired in gold recently, as the “normal” hedge fund and technical fund speculators have been selling COMEX gold contracts, not buying them. Instead, the big COMEX gold speculative buyers have been the commercials who were previously heavily short. Correctly identifying the true speculators driving a market is a distinction that makes all the difference in the world. That so few see it is amazing to me."

"There is little doubt that the commercial gold shorts have taken a horrific beating in buying back their short contracts. My guess is that the collective loss on the covered gold contracts so far [since early August - Ed] is on the order of $1.5 billion. Such a loss, even when spread equally among the roughly 40 traders classified as COMEX commercial gold shorts, amounts to a hefty per entity average loss of $37.5 million each. And I’m speaking of closed out losses only; there is still a large number of open gold shorts that the commercials are holding whose resolution remains to be seen. Those “open” losses run to an additional $8 billion at current gold prices. It is imperative to recognize the unprecedented magnitude of these closed out and open gold losses. It’s not enough to say that these commercials lost big-time; having never lost before on such a scale, the turnabout for these commercials must be shocking to them."

Shakes
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