by Andy Hoffman, Miles Franklin: Following Friday’s retail sales catastrophe, interest rates plunged, and the market-based odds of further Fed rate hikes declined to just 8% in September and 48% in December. Led, of course, by begrudging Wall Street cheerleaders like Goldman Sachs’ ALWAYS wrong Chief Economist, “Hapless Hatzius.” Who, like his partners-in-crime at the Fed; and likely, its soon-to-be-new Chairman Gary Cohn – who before he was appointed Trump’s top economic advisor, was Goldman’s Chief Operating Officer; dramatically overstated the economy’s “strength” – as part of its ongoing, but rapidly collapsing “economic strength” propaganda campaign.
Combining this horrific economic data with last week’s unprecedented Fed about-face; when, following weeks’ of fraudulent “hawk-speak,” Janet Yellen gave the most dovish speech imaginable; and it couldn’t be clearer that not only is “Trump-flation” dead, but any remaining “hope” of economic improvement. Consequently, as I vehemently espoused Friday, the path of least resistance for interest rates is down – until the “bond vigilantes” inevitably show up; and for Precious Metals, up.
Which is why it shouldn’t surprise anyone that Friday afternoon’s COMEX COT, or Commitment of Traders report was wildly Precious Metal bullish; as quite obviously, the Cartel’s “July 4th holiday week paper smash” was enacted solely to utilize paper-thin trading conditions to further cover naked shorts. To wit, through Tuesday the 11th, the “commercials” covered an additional 33,310 gold and 14,661 silver contract shorts, bringing their cumulative short positions to their lowest levels since gold and silver’s ultimate bottoms in December 2015 – at $1,070/oz and $13.75/oz, respectively.
Friday morning, I wrote that if this was indeed the case, we could be in for a significant Precious Metal rally – at a time when they have NEVER been more undervalued. And consequently, that the “historic valuation anomalies” currently witnessed in the PM sector – particularly, in silver – could dry up quickly, if one fails to act to capitalize on them. Hopefully, this morning’s rally – amidst the most PM-bullish fundamentals in memory – is indeed the beginning of the Cartel’s long-awaited, mathematically certain “end game.” To that end, gold just re-took its 50-week moving average, at $1,232/oz.
“The weekly COMEX COT report may well reveal massive covering of “commercial” (naked) shorts. Which, if that’s indeed the case, could easily incite significant speculative buying. And by ‘significant,’ I mean it’s entirely possible that, amidst perhaps the most bullish gold and silver fundamentals since citizens were first allowed to buy them in 1975, said ‘commercials’ may finally start to realize that the inevitable end of their two-decade paper charade is nigh.”