Follow the link below about positions in the futures for gold and silver, I copied the points below from the article.
What is important is that the Specs are not even in this market right now and the managed money was reduced/forced out probably from speculating, front running the deal and then margined out because of leverage. What is important is that Swap dealers and commercials reduced more from their short position and Swap dealers even added long. For everyone selling their long position, someone was buying them, that is probably JP covering his shorts. That’s what this takedown in Gold and Silver was probably about, but no one will admit to it and no one will be allowed to prove it. Vin
Managed-money accounts significantly decreased their net-long position in gold, cutting 24,596 gross longs and adding 6,224 gross shorts, dropping the net long position to 129,502 contracts. Producers cut exposure to both sides, but cut many more gross shorts than longs, lowering their net short position. Swap dealers decreased their net-short position by adding gross longs and slicing gross shorts.
This is the lowest net-long position for managed-money accounts since February 2010 and the second-lowest tally since this report’s inception in September 2009.
Non-commercials in the gold legacy report trimmed 34,710 gross longs and added 9,569 gross shorts, reducing the net-long position to 158,754 contracts. Commercials cut from both sides, particularly from the short side, which lowered their net-short position.
Speculators are now sitting on their smallest net-long position since May 2009.
Wow, it looks like the Comex want your gold too. We mentioned awhile ago that the Gold Man was coming for your gold, and now so are his buddies.
The CME is now allowing more gold to be used as collateral for margins, increasing it from $200M to $500M. Why any would post physical with these guys is beyond me unless you are leveraged up and have no other tangible asset to use as collateral. Even if you did post the additional gold, I would highly suggest reading the contract before you sign it because if the trade goes against you, then you may lose the gold too or just have it stolen from you. That’s how they will probably meet the physical demand for gold, by setting up the paper game much bigger and longer than we all anticipate. This bull market in gold and silver just got a lot more interesting and it will be ones for the history books. I would highly suggest getting the physical while you can, because we may start hearing about shortages and higher premiums. This is a bull market and demand is just starting to grow but it will be choppy along the way, so you better sharpen up your trading skills because the fundamentals are lined up and now we just have to wait for the technicals to confirm it. Vin
Gold? Sure, We'll Take More of That, Says CME
By Rhiannon Hoyle
The Wall Street Journal
Monday, October 3, 2011
CME Group will today increase to $500 million the amount of physical gold its U.S. clearing members can post as collateral for margin requirements, from the existing $200 million.
The step is the latest in a string of moves by exchanges and other financial services firms to increase the use of gold as collateral, which essentially places the precious metal in the top tier of asset classes.
CME said that by increasing the cap on the use of gold, it aims to help traders "manage their risk while allowing them to take advantage of increasingly attractive gold lease rates."
The new limit will initially just apply for members of the exchange's U.S. clearing house, which has allowed firms to post up to $200 million worth of gold as performance bond collateral since late 2009. However, managing director of metal products Harriet Hunnable said the exchange is working on similar arrangements for its European clearing division, and expects this to be in place well before the end of the year.
"We have had a number of clients asking us to raise the collateral level above $200 million," she told Dow Jones Newswires in an interview Monday. "There is a lot of gold activity at the moment, and this form of collateral is highly attractive for bullion banks."
The change to the collateral levels for CME's U.S. clearing members will take effect from close of business Monday, the exchange said.
It was back in October 2009 that the CME Group announced it would allow physical gold to be used as collateral for margin requirements. Rival Intercontinental Exchange Inc. followed suit in November 2010.
Then last February, J.P. Morgan Chase & Co. also said it would start accepting physical gold as collateral in some financial transactions.
Meanwhile, the World Gold Council also is gaining traction in its push to have the Basel Committee on Banking Supervision accept the precious metal as a Tier-1 asset for banks, along with government bonds and currencies.
Market participants say such moves are re-establishing gold's role as a monetary and financial asset.
However, Hunnable didn't rule out the possibility that other commodities may be considered for use as collateral in the future.
"Gold is a widely held metal, and it is the material for which we have been asked to increase our collateral provisions. But would we look at other assets? Never say never," she said. "The world is changing, so we will have to see what comes next. Our risk management group does a lot of work to make sure we are ready to meet the next areas of high demand," Hunnable added.
The Financials chart is looking ugly right now, It couldn’t break above the 50 dma last week, it’s trending down on the day and the indicators are turning negative. I think it will test the lower bollinger band and if that doesn’t hold, watch out the banking sector could be in a world of pain in the next few weeks. If this closes at the low today, it has a chance to continue lower this week.
I added to my HFD last week and am willing to hold on to my whole position for the moment. The fundamentals for the banking sector is a much bigger problem and even if the bailouts work, the amounts of shares issued, bailouts needed and printing by CBs to liquify the existing banks is negative overall for the whole sector. They will be diluted in value where the shareholders will get nothing in the long run and guys like Buffet will get nothing but consistent payments from the perferred shares he bought. I guess he must be an Oracle selling his shares last year and now buying perferred shares (I guess the media forgot to mention that one).
I think we are entering a few financial world where book value doesn't matter, investors will flock to companies as long as they can make earnings and pay out dividends. Maybe the government welfare state turns into a corporate welfare share, where nationalization of public pension money is paid out by government as a percentage from corporate earnings after they have been nationalized. If we have a collapse of the banking sector, we will see a move toward bank nationalization and the powers that be will be able to take control of everything else they already don't have their hands in.
Here is a quick 5 year overview of how Energy, Gold and Financials stocks have preformed with some support and resistance lines.