this analysis of the fundamentals of precious metals is from andrew hoffman, a contributor to gata:

As we know, the Cartel ALWAYS increases its shorts as the prices of gold and silver rise. However, in this case, for the first time EVER, they have not. Gold and silver have risen by 17% and 8%, respectively, over the past two months (while the Dow has fallen by 5%), however the TOCOM shorts have reduced their gold short position by 91% to its lowest level ever (essentially neutral at short 1,164 contracts) and are now long silver. Meanwhile, Goldman on Friday went long gold again in major fashion, yielding its largest long position EVER. And, simultaneously, the COMEX gold and silver open interest positions have fallen by 8% and 10%, respectively, back to their lowest positions in 3-4 years (last seen when gold and silver were nearly half the prices they are today).

Not to mention, since that time nearly HALF of the physical gold and silver COMEX inventories have been claimed (if the gold and silver are even there), and each day it’s looking like either February or March will represent D-Day for the COMEX short squeeze (barring any further dirty tricks by the Cartel). In other words, taking out the market noise of the past few weeks, the themes of the gold and silver markets have been a) MASSIVE, UNPRECEDENTED SHORT COVERING by the bad guys during a period of rising gold and silver prices, b) MASSIVE, UNPRECEDENTED ABANDONMENT OF THE GOLD AND SILVER FUTURES MARKETS by traditional long speculators as they likely leave the COMEX forever, and c) MASSIVE, UNPRECEDENTED PHYSICAL DELIVERY REQUESTS on the COMEX.

Combine these themes with the MASSIVE PHYSICAL GOLD AND SILVER SHORTAGES, including closing mints, rising premiums (no more eBay cash back offers, for instance), and the topping of the dollar, sprinkle in the new Zero Interest Rate Policy, MASSIVE planned fiscal stimulus ($586 billion in China and $850 billion in the U.S.), heightened bailouts, and an incoming president designing himself to put FDR to shame, and you have the ingredients for a very near-term earthquake in the Precious Metals markets.

Nothing is guaranteed, but if I were a Vulcan like Mr. Spock, I’d say that you can’t argue with logic!