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Gold/Mining/Energy : Precious and Base Metal Investing -- Ignore unavailable to you. Want to Upgrade?

To: menanna who wrote (25321)	12/10/2003 11:07:02 AM
From: Louis V. Lambrecht	Read Replies (1) \| Respond to of 39344

Annamaria - also waiting for 415-420 PoG to be a battle. Want some phoney theory of mine? <g> Been watching the gold futes for a while and puzzled with the CoT numbers. So, started to follow the aggregate open-interest (sum of o/i of all contracts) vs. front month o/i. To be short: I think I have identified a mass of 125k contracts which appear to be in strong hands (these are 12.5 million ounces). Only spotted them on the Dec futures contract. Jim Sinclair speaks of a commercial holding a bag of 160K contracts. So, we almost agree). At rollover of the Dec contract (end of November) I was expecting the commercials to be assigned for physical delivery. Which hould have been confirmed with a rise of the lease rate. Instead there was some "mis-pricing" between the Dec futes and the Feb futes. As if the mass of o/i was spreaded at a premium for the longs. Most o/i moved to the Feb futes. IMO, such an operation was costly for the commercials, and the longs accepted the bonus to delay delivery. I doubt the longs will repeat such a delay. If I am correct, I should be watching two values: aggregate open-interest should stay above 240K contracts (125K strong hands, plus residual "normal" trading volume), lease rates should stay flat until a sudden rise. Since Feb became the front month, o/i is flat 274-280K contracts. What could happen, and will be preceded by a rise of the lease rate, is that the strong hands would ask for delivery. Impossible as 12 million ounces is 1/4 of total world production. This would means a squeeze, no problem to pass $500. And here comes the catch: if I am correct and the Comex would impossibly be able to deliver, the Comex will purely suspend transactions or call for a 100% coverage of the margins on the futes. The government could seize un-patriotic private holdings of bullions and freeze the accounts of un-American profiteers. Leaving few people able to exit their position at the higher prices. So, if o/i stays above 240K and the lease rate rises, better stay away from the metals (mid-January should be the deadline) and ride the rise in PM equities. Sluggish performance of those equities with PM price rise this week would confirm that the battle is on taking positions in equities. Sluggish performance of equities can also indicate an impending harsh correction in the metals (when PoG would attempt to break 415-420). Commercials will do all they can to stop prices rising. This is not changing my roadmap for a rally in prices by end of January. But as I said, stay out of the Comex by then. My 2 paranoidic Eurocents. <g>