With gold breaking $1,700 and silver nearing the
$33 level, today King World News spoke with acclaimed trader Dan Norcini
to get his take on where we are in the gold and silver markets after
this latest move. Norcini was quick to lay out the position of the
hedge funds in both of these markets as they are seen as a key driver.
“The gold market has a great deal of
momentum behind it and the round number of $1,700 is important because
those round numbers can sometimes slow an advance in a market like
gold.
We’ll have to wait and see
if gold can run right through $1,700 or if it needs to do some work here
to get through that area. If you notice, today gold had cleared $1,700
comfortably, but it has now retreated right back down to that level.
If we look at the silver
market, in the past, the commercials had a record 66,000 contract net
short position in silver, but currently they are at 47,000 contracts net
short, including options. It is also true that the hedge funds have
room to add long positions in the silver market as well.
But this might shock some
people, the swap dealers are still net long the silver market. The swap
dealers have been reducing that long position by selling to the hedge
fund buyers. So there is still the potential for the silver market to
continue to experience some significant upside.”
Norcini concluded:
“What you can bring away from this, Eric, is that hedge fund money has
been largely absent from the gold and silver markets. So the driver to
move these markets higher is coming back in with this hedge fund
buying. There is a very healthy interest now in the hedge fund
community to be in both the gold and silver markets, and this has the
potential to continue to fuel this rally.
This is one of the reasons
why, over the past 30 days, the price dips have been very shallow in
both of these markets. The hedge funds are buying the dips and keeping
retracements to a minimum. As long as they continue to buy the dips, I
expect these metals to continue trending higher.”
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