The concept of futures markets did not originally include banks in the non-speculative category, because futures markets were a means for farmers to unburden themselves from price risk, due to seasonal factors, to speculators willing to take the risk upon themselves.However, banks managed to persuade the CME to be categorised as non-speculators, on the basis they often acted as agents for producers in non-agricultural contracts. And in gold, which is what concerns us, they also ran positions in London which they wished to hedge on Comex. But as has been seen in Figure 2, the bullion banks now account for 70% of the shorts, when in the past they would typically account for significantly less. And as we show later in this article, they have no physical gold in London to hedge. The result is their gross short position of 262,796 contracts is now an uncovered commitment of $53bn spread between 27 traders
What is it going to be, a short squeeze or a massive bludgeoning of gold?
One or the other, for sure.
Stand in line, buy your tickets and make your bets. It is going to be really exciting, and it won't matter which way the ball rolls.
But I think the writer needed to perhaps focus a bit less on the mechanics of trading and more on things like this, which will push the POG higher, regardless of what manipulation takes place.
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