this is from gene arensberg's got gold report:

Big and short

Meanwhile, as the U.S. dollar has once again been taken out behind the barn and “shorted,” we have to take note that the very largest futures traders on the COMEX have seen fit to take on much larger net short positions for both gold and silver.

If we were to call the “play-by-play” in the precious metals baseball game, we would say that the big commercial traders now have the bases loaded on the “short side,” meaning that the largest silver and gold futures hedgers and short sellers have positioned themselves very strongly for lower gold and silver prices. At least they have vis-à-vis their positioning on the COMEX. (Should we be looking for them to swing for the fences or instead look for a “squeeze play” as options expire here in the U.S. on Tuesday?)

We cannot know the collective commercial trader’s relative positioning in the more opaque and much larger OTC precious metals markets based in London and Zurich and cleared through the London Bullion Market Association (LBMA). What we can see and measure is their relative positioning on the COMEX by itself, something Gold Newsletter subscribers have the benefit of just below in the gold and silver COT sections of the report.

The quickly-said upshot is that while we have seen another harsh dollar plunge and a nice bump higher in both gold and silver (as expected) since the last full report, the conditions we watch closely have deteriorated measurably in the indicators we give the most weight to on a short-term basis. As gold and silver have gone higher, so has the apparent opposition to them doing so in other words.

What does it mean? Longer term this report remains solidly in the bullish camp for gold, silver and mining shares. However, very short term the odds of a pullback have escalated to more likely now along with the escalation of the COMEX commercial net short positioning. “More likely” means just that, a pullback is not guaranteed. Indeed the current dollar weakness looks and feels like it may continue this time and that is a tailwind for both gold and silver. Technically the buck has “broken” and it really wouldn’t surprise this writer if the current rally in precious metals not only continues, but picks up steam in the weeks just ahead.

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