The Crimex Commitment of Traders (CoT) this week showed that managed-money slingers shorted even more into a rising market. I believe this net long position of 11,435 to be the most extreme (and bullish) on record [see blue line on chart below]. Also notable is that small speculators jettisoned 5,160 longs. So as of Tuesday, there was considerable short-covering fuel and spec potential for going long.

The rollover of futures into out months was low this week. There was a reduction of 38,000 open interest contracts since the day of the CoT. The ideal set up for the bulls would have been for producer/merchants and swap dealers to have quietly — in an iceberg-bid fashion — reduced or covered their short positions, thinning out the paper markets and really leaving the slingers high and dry. There are still 22,977 April futures out going into settlement.

Yes, if I was a bullish gold plotter, I would ask the Crimex warehouse to arrange for a sizable delivery. This would be the best opening for that ever.

Pierre Lassonde had some spot-on comments that I thought were worth noting. The Chinese are back gambling on stocks right as the authorities are cracking down that speculation. I’m surprised Lassonde’s scenario hasn’t already happened. This next outlet is logical:

We all know the propensity of the Chinese to gamble, and so at some point the Shanghai Gold Exchange is going to become a gambling casino, and this will cause the price of gold to really skyrocket.”