Today London metals trader Andrew Maguire spoke with King World News about stunning developments that we've never seen before in the history of the gold and silver markets and why this has the shorts so incredibly worried. Below is what Maguire had to say as the war in the gold and silver markets continues to rage.
Eric King: “Andrew, you made an absolutely spectacular call two days ago on KWN, right at the lows in the gold and silver markets. That was incredible timing on your part.”
Perfect Bottom Call By Maguire On Gold And Silver 2 Days Ago (See Charts)
Gold (Note Bottom On The 11th)
Silver (Note Bottom On The 11th)
Andrew Maguire: “When we last spoke on the 11th, it seemed as though virtually everyone in the world was going bearish on gold and silver. At that time (two days ago), as we were hitting the lows,I told KWN readers that the commercials and the sovereigns were massively on the buy side….
"Watch Silver"
“But I’ve been saying to my clients, ‘Watch silver, because silver is going to lead the way up.’ And sure enough the silver market has been trading really well since we spoke at the dead lows on the 11th.
1,000 Ounce Wholesale Silver Bar Market Tight
The reality is that the physical silver market is trading at the margin. Meaning the 1,000 ounce wholesale silver bar market is tight. So the LBMA will make sure that the industrial buyers get their silver delivered first.
Disaster For The LBMA And Skyrocketing Silver
If an industrial user was ever to experience a significant delay in delivery, there would be a run on silver by industrial users in order to stockpile physical silver. Nokia and other industrial users cannot afford to have assembly lines shut down because of lack of silver. But, Eric, this would be a disaster for the LBMA paper manipulation game. This stockpiling of silver would break the just-in-time delivery market at the LBMA and the price of silver would skyrocket.
Panic Selling Into Massive Sovereign And Commercial Buying
Eric King: “What about the gold market?”
Maguire: “I told you last time we spoke that all of the technical traders were puking up their positions and some were even aggressively going short as gold broke the 50-day moving average. I said to you that they were doing this panic-selling right into the teeth of massive physical buying from sovereigns such as China and others, as well as buyers in the paper market such the commercials — who were covering short positions.
Shorts Worried About Gold's Reversal
Now that the gold market is suddenly moving higher, this is setting the stage for additional short covering. All the technical traders who were aggressively shorting as gold broke the 50-day moving average are now underwater on these positions. These fresh shorts are very stressed about the upside action and their underwater short positions. There are a heck of a lot of people who are now wrong-footed on those fresh short positions.
We've Never Seen This Before In The History Gold Market
The reason I told you two days ago that the downside pressure was not going to last was because the real market — the physical market — was experiencing incredibly heavy accumulation by the sovereign buyers. That's why I made the statement on the 11th, when the price was crashing and virtually everyone was predicting gold was headed back into the $1,100s, that I was going to hold on to fresh long gold positions and also going to add silver swing trades on the long side.
The bottom line is we've got two markets — the non-delivery market and the physical delivery market. One is leveraged and that's why it overshoots to the upside and the downside. But never before in the history of the market have I seen such strong physical buyers willing to sit and take on all the sell orders hitting the tape. That's why right now, Eric, the shorts are feeling the pain, especially in the silver market.”
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