Notes From the Rabbit Hole

Birthed in Short Covering?

While I do not pretend to have been impervious to the bearish CoT data for gold and silver, we noted on February 28th in NFTRH 384 the similarity in silver’s CoT alignment to that which was in place at the birthing phase of the previous bull market (actually, the 1st phase of the still intact secular bull market – see higher highs and higher lows).  We speculated that the silver bull that began early last decade was at least partially birthed in short covering.

Here is a chart from this week’s edition showing a view of what I mean.  Courtesy of Barchart.com (mark ups mine)…

We may be witnessing something big, in real time.  Because if silver does take over leadership from gold and the big buildup in commercial shorting provides some of the fuel, we would most assuredly be exiting the deflationary phase of the last few years.  For certain markets that could mean growth and for the US it would mean no more Goldilocks to hide the inflation behind.

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