first majestic silver

Commercials on the Ropes

Technical Analyst & Author
February 21, 2007

Some people thought I was mad posting a GOLD and SILVER BREAKOUT ALERT, what with the Commercials being so heavily short gold, and with yesterday's action I began to wonder myself, which is why it didn't get posted on public websites on the 20th as originally planned. The reason for posting that breakout alert was that a rare technical setup exists that actually makes the Commercials' huge short position wildly bullish. This is because we already have a confirmed breakout by gold from its giant 3-arc Fan Correction, as described in the latest Gold Market update, and gold has already absorbed a lot of the overhanging supply in the $660 - $680 zone, and thus a continuation of strong physical demand has very quickly pushed the Commercials' backs to the wall - they can't print gold - there is only one avenue left open to them - cover their short positions or face annihilation.

At the time of writing gold has been temporarily capped again at the critical $680 level, but the strength of today's advance, with gold up over $20 in the space of a few hours, provides ample illustration of the disarray in the Commercials' ranks. Put yourself in their position, would you be willing to put your head on the block to save your compatriots from a wipeout? - probably not. It will be a case of every man for himself and so we may witness - are already beginning to witness - the rare spectacle of the Commercials in a state of blind panic.

The sudden $22 rise in gold today is believed to be the result of the onset of an unseemly scramble by the Commercials to cover their short positions. It's anyone's guess what will happen when the key $680 level is decisively overcome - all hell could break loose. It could quite closely resemble the scene when someone yells "fire!" in a crowded theatre.

Clive Maund

Clive P. Maund’s interest in markets started when, as an aimless youth searching for direction in his mid-20’s, he inherited some money. Unfortunately it was not enough to live a utopian lifestyle as a playboy or retire very young. Therefore on the advice of his brother, he bought a load of British Petroleum stock, which promptly went up 20% in the space of a few weeks. Clive sold them at the top…which really fired his imagination. The prospect of being able to buy securities and sell them later at a higher price, and make money for doing little or no work was most attractive – and so the quest began, especially as he had been further stoked up by watching from the sidelines with a mixture of fascination and envy as fortunes were made in the roaring gold and silver bull market of the late 70’s.

Clive furthered his education in Technical Analysis or charting by ordering various good books from the US and by applying what he learned at work on an everyday basis. He also obtained the UK Society of Technical Analysts’ Diploma.

The years following 2005 saw the boom phase of the Gold and Silver bull market, until they peaked in late 2011. While there is ongoing debate about whether that was the final high, it is not believed to be because of the continuing global debasement of fiat currency. The bear market since 2011 is viewed as being very similar to the 2-year reaction in the mid-70’s, which was preceded by a powerful advance and was followed by a gigantic parabolic price ramp. Moreover, Precious Metals should come back into their own when the various asset bubbles elsewhere burst, which looks set to happen anytime soon.

Visit Clive at his website: CliveMaund.com


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