Friday, August 16, 2013

Gold Shorts Cover at Fastest Pace In 13 Years

Tyler Durden

Gold shorts covered an enormous 23,518 futures contracts last week, or the equivalent of 2,351,800 ounces of gold. With JPMorgan scrambling to get their hands on gold to deliver, it seems concerns over a short-squeeze are starting to solidify.
The last time shorts collapsed this quickly was in the 1999/2000 period, which saw a considerable 33% squeeze ramp in gold prices over the space of 3 weeks in the fall of 1999.
Notably, the gold short position still remains huge compared to historical values, having fallen back only to the previous all-time record high levels (i.e. plenty of room for more squeezing). In addition to this surge in covering, gold ETFs saw their first inflows in 2 months.
The last time shorts had to cover such volume (September 1999), gold prices surged.
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