History suggests that gold and silver are both putting durable bottoms based on the composition of the positions in the futures market and the extreme of the decline in price..
The dichotomy between gold and silver outflows with both metals in price declines is interesting, to say the least. Physical gold is flowing out of the funds and ETFs, while silver is actually increasing.
It is telling us something about how funds and ETFs might add to their gold holdings when the price declines stop and the bull rally begins anew.
One difference is that the central banks do not have large physical holdings of silver that they are prepared to lease out to private concerns.
The use of this extreme leverage in physical gold in the face of steady buying and competing claims is like combining potassium nitrate and concentrated sulfuric acid.
And no one could have seen it coming.
