Ultimate Contrarian Indicator: Gold Is Most-Hated Asset Class

By now everyone who follows the metals pretty closely is aware of the stunning reversal the metals made today after the blatant smash in the silver market at yesterday evening's commencement of global electronic paper futures trading. A massive number of silver contracts were sold into the Globex electronic trading system, taking the entire market by surprise and wiping out a whole series of stop-loss orders there set below the market. The silver market was driven down $2.10 (9.5%) in less than 4 minutes. It was without a doubt the motivated, premeditated operation of someone who was trying to completely disrupt the silver market. It was someone who was operating without any fear of being investigated by the market regulatory branch of the Government.

But a funny thing happened. Once the initial shock had quickly worn off. The market slowly moved higher the rest of the night. By 10:00 a.m. Denver time, about 18 hours later, the price of silver was even with its Friday close. Once that occurred, the market started to quickly run higher in frenzied short-covering. As I write this, silver is up 2.4% from Friday's close and gold is up 2%.

So what happened? To begin with, the enormous appetite for physical gold and silver was fueled even more by last night's lower prices. Large premiums for gold bars, something rarely seen, are now being paid in Asia and India. We are getting reports of up to 3-week delays for delivery. But don't take that from me, if you go the Shanghai Gold Exchange website, you'll see for yourself that no deliveries of gold have been reported for at least 2 weeks. Unprecedented. The deliveries are not being reported because the gold is not available to be delivered. Therefore there's nothing to report. This is going to end badly for anyone riding the coat tails of the manipulating banks by shorting this market, because I can guarantee you that they are covering their tracks and likely have shifted to the long side of the trade by getting long physical metal. Certainly the net short position of the banks on the Comex is as low as its been in many years.

At any rate, I wanted to link an article written by the proprietor of the Acting-Man blog. This guy lays out the contrarian indicator case for gold and explains why the western Central Banks are so desperate to try and discredit gold and discourage anyone from converting their fiat paper money into gold and silver:

It is a good bet that if gold had continued to rise in the face of money printing being accelerated all over the world, the inevitable loss of faith in central banks would have happened sooner rather than later. That it will eventually happen is unavoidable – the modern monetary system was fated to self-destruct the moment it was conceived. This is so because central planning and price controls cannot work in the long run, even though central banks are socialistic institutions adrift in a capitalist sea, so to speak.

I highly recommend taking the time to read this short, well-written and documented commentary, as it will shine a bright light on the truth for anyone who was equivocating about fact vs. fiction.