Merv Burak: Who could afford such losses shorting gold?


12:40a ET Monday, October 15, 2007

Dear Friend of GATA and Gold:

Merv Burak's weekly gold and silver technical analysis report at Market Oracle picks up on a point made often by GATA over the years -- the seemingly infinite resources behind the short position in the gold market, resources that could belong only to governments. Burak doesn't quite draw that conclusion but couldn't come closer. He writes:

"... [w]ith such heavy short selling over the past 6 weeks, this had the effect of keeping the price of gold from exploding on the up side. This may also mean that there is still to come this buying activity to cover the shorts, which should boost the price further -- but it's not all that clear.

"There seems to be a lot of capital behind this short selling. If it continues it could have the effect of discouraging further buying and cause the price to move lower. Shorts could then cover under the radar screen of such lower trending price, as they did during the short sales and an upward trending price. But this starts to sound like manipulation of gold price.

"Ah! Welcome to the real world.

"Now who could it be that has such deep financial pockets to be able to withstand such huge transactions and potential losses should they lose their bet? That's where we get a whole lot of different conspiracy theories. I don't have a clue who could be involved so will leave it up to your efforts to search the Internet and find out for yourselves, should you be further interested. One interesting site to start with could be

"Another way to look at this is that during this six-week period gold increased in price by $80 or an average $40 per ounce (that is, $4,000 per contract). With 153,120 contracts, that's a total average loss so far of $612 million. Who can afford that kind of loss? It sure isn't your average futures speculator."

You can find Burak's commentary here:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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