Gold is up
$8.00, $15.00, $26.40 today. The price of gold at a minimum should be the cost to mine the gold, transport it and refine it. Currently the price of gold is about the cost to mine the gold. Silver is below the cost to mine it. The prices of gold and silver are going up as JP Morgan is struggling to cover their short positions. Where will it end? Only China knows: once they announce a gold backed Yuan, the value of a US FRN will be worth less.
Gold shorts covered an enormous 23,518 futures contracts last week – the equivalent of 2,351,800 ounces of gold. With JPMorgan appearing to be calling everyone (here and here) to get their hands on gold to deliver, it seems our concerns over a short-squeeze are starting to solidify. The last time shorts collapsed at this fast a rate 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 moar squeeze). In addition to this surge in covering, Gold ETFs saw their first inflows in 2 months.