Don Coxe, Chairman of Coxe Advisors LLP, has issued a powerful new commentary entitled, What Is China Up Too?“ 

In this dispatch, Don spoke to the recent Chinese acquisition of a centerpiece of the U.S. meat production industry, the terrible Fed governor nomination choice now on the horizon, and of particular interest to our readers—an updated commentary on gold.

Beginning at the 27:40 mark, Don noted that:

“What I believe is happening with gold is [that] we’re seeing the gigantic [long] positions that have been taken in the futures markets…[by] the speculators were wiped out, and what we have [now] is the largest short position in history on gold in the futures market.

On the other hand for the commercials, who are not speculators, who need to sell forward (go short) we’ve already seen a couple of gold companies reporting better earnings than expected because they had hedges in place. They have the lowest exposure in their short position—one of the lowest exposures in decades.

So you have those who know best are no longer short, as a matter of pure business principles, because they see that this just doesn’t make sense, and those who are pure speculators—with the biggest short position in history.

That kind of thing cannot survive if there’s…going to be any kind of continuation of these expansionary monetary policies. So therefore I don’t think it’s a matter of if, but when, that we’re going to see an upside breakout in gold.

I remind you that in the 70′s…the huge breakout in gold did not occur at a time of the worst inflation…it’s once the people lose faith in the paper money and the policies that are being pursued, [that] you get the rush into gold.

So [the] great game is going on at levels where there are big expiring contracts in gold…our work has been trading in the commodity, [and] I can simply tell you that the drama is unfolding where you’ve got this gigantic short position, and eventually the shorts are going to get scared. So it looks like from my perspective, that we’ve seen the low in gold, and now we’re going to watch who loses the most when gold moves to the upside, which…is virtually inevitable.”

This was a powerful new commentary issued by one of world’s most successful commodity fund advisors, and should be carefully contemplated by serious investors and market students.

To listen to Don’s conference call in its entirety (and to follow his regular work) visit:

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Tekoa Da Silva
Bull Market Thinking

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