New Record on COMEX

The graph below (courtesy of ZeroHedge) tells the story grabbing headlines at present.  Gold has joined silver in having the largest number of Managed Money (Hedge Fund) short COMEX contracts on record courtesy of the crafty Commercials/big Bullion Banks.  They are now net short.  For contrarians that is a screaming buy signal as we discussed previously.

COMEX analyst Ted Butler had this to say after the above was revealed on Saturday…

“I don’t have any reservation in speaking about gold in terms of COT [Commitment of Traders report issued by COMEX] market structure and on that basis alone, gold looks good to go higher from here. Like silver, it is very far advanced in establishing an important COT cycle bottom. Since there is no way to adequately predict in advance precise price bottoms and, especially, the maximum number of contracts to be positioned, the best anyone can do is hope to come close.
Instead of reminiscing over the past five years, an objective review of what transpired on the COMEX over the past two months should tell you all that matters in gold and silver. It has been the speculative selling of the equivalents of 10 million oz of gold and more than 250 million oz of silver (all arranged by the COMEX “commercials”) that has caused prices to drop. And it will be the unwinding of speculative short sales and new long positioning which will drive prices higher.
In fact, just as the maximum amount of attention and sentiment is set on lower prices, the focus should be on how high gold and silver prices will advance. That’s the important consideration at this point. The answer to that question, of course, lies with how aggressive the commercials will be in selling when the speculators get buy signals (courtesy of the commercial price riggers themselves). But the fact that managed money shorts are larger than they have ever been also means these traders have never been put in a more compromising position.

If you look at the chart above you can see the lowest low beforehand was in late 2006.  The chart below shows what happened immediately afterwards, and that is in essence what Ted Butler is talking about. The difference this time is the coil is wound far far tighter….