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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (21623)	11/10/2004 5:11:42 PM
From: ild	Read Replies (1) \| Respond to of 110194

Date: Wed Nov 10 2004 16:06 trotsky (stock market) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved today may mark a turning point - bullish sentiment is rampant for no good reason, and there are a number of warning signs ( not the least of which is consistent NYSE member selling over the past two months ) . here's hoping that gold will decouple from the stock market, which is possible, but by no means certain. my doubts are grounded in the fact that speculative dollar short positions are so large ( at record levels in some currency futures ) - and the fact that the dollar has consistently correlated negatively with BOTH the stock market AND gold this year. such correlations DO shift occasionally, but it's the same as with trends, i.e. there's always a great deal of inertia that needs to be overcome. Date: Wed Nov 10 2004 15:45 trotsky (Ted Butler) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved note, i didn't say it's reasonable to sell silver forward for 10 years. i'm only saying it has been done, and may explain a great deal of the outsized dealer short position. the point about inventories is that 'undocumented' obviously doesn't equate to 'non-existent' - China's selling proves that a large undocumented inventory must have existed there ( and may still exist ) . the possibility that a large undocumented inventory is subject to hedging at the COMEX isn't an unreasonable proposition imo. on a more general note in this context, there's no reason prima facie to doubt the GFMS estimates on European inventories. as for the recent swelling of positions, i would agree that a certain percentage of the COMEX hedger positions is speculative in nature, even though its in the hand of 'commercials'. after all, commercial hedgers are explicitly allowed to take speculative positions in addition to their positions arising from actual commercial transactions, and their selling provides market liquidity - the speculators have to buy from SOMEONE after all ( and i note that it is really the specs who are the price drivers in every commodity market - and their positioning is usually based on quite rational analysis. of course there's also a fair amount of technical trading, but that's rational as well imo ) . as to the likely size of the portion of the hedger position that's speculative in nature, that's probably the amount that usually gets covered in the downdrafts.