Reiner why does ABU need to crack 3.8 before first prod report? The chart (below) looks positive enough already.
A good description on why short covering rallies can be so powerful.
http://www.mining.com/web/gold-short-squeeze/
Long read (I didn’t read all of it) but some parts below summarise what I did read.
“Futures speculators have responded to this year’s extreme bearishness plaguing gold by amassing wildly-outlying record short positions in it. These huge and highly-leveraged bets can only be unwound by buying gold futures to cover the shorts. As gold continues rebounding out of its recent hyper-oversold lows, the futures traders on the short side will have to buy. This will likely fuel a massive short squeeze.
Major short squeezes are the stuff of market legends, rare and extreme events. Whenever a price falls particularly far and fast, traders wax exceptionally bearish on it. They extrapolate the downside action continuing indefinitely, and some want to play that momentum. So they reverse the usual trade of buying low then selling high. They effectively borrow the asset from someone else to sell it in the open market.
Naturally whatever is borrowed must be repaid. If the short sellers are right, if the downtrend continues, they can buy back the underlying asset later at a lower price. They strive to sell high then buy low, the difference pocketed as gains. This buying to return the underlying asset to its original lender is called covering. It’s in this covering that short squeezes are born, when prices turn against the traders shorting.
Unlike normal long trades, short ones have unlimited risk. The biggest loss possible when buying an asset outright is 100%, at worst it goes to zero. But there is no limit to how high prices can be bid up, so the worst-case loss on a short is theoretically unbound. This attribute puts tremendous psychological pressure on shorts when trades move against them. They have to cut their losses as soon as possible.”
“A great example is the last secular-bull-record short position held by gold-futures speculators in early 2005. With gold near a major low, longs plunged to 145.1k contracts while shorts surged to 108.3k. This extremely bearish bet by the futures traders was dead wrong though. Over the next 15 months or so, gold would blast about 65% higher in its biggest upleg of its secular bull at the time. High spec shorts are a bullish indicator.
And with gold merely near $425 at this bull’s last record high in spec shorts, they were risking far less capital than they are today with gold near $1250. Those 108.3k contracts then controlled $4.6b worth of gold, but the recent outlying-record 178.9k contracts controlled a staggering $22.4b worth of gold! The more extreme the futures speculators’ shorts, the more guaranteed buying exists to catapult gold higher.”
- Forums
- ASX - By Stock
- PRX
- pog !
pog !, page-8
-
- There are more pages in this discussion • 2 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)
Featured News
Add PRX (ASX) to my watchlist
|
|||||
Last
0.3¢ |
Change
0.000(0.00%) |
Mkt cap ! $5.294M |
Open | High | Low | Value | Volume |
0.3¢ | 0.3¢ | 0.2¢ | $972 | 391.6K |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
5 | 7325864 | 0.2¢ |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
0.3¢ | 19838689 | 19 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
5 | 7325864 | 0.002 |
10 | 98550498 | 0.001 |
0 | 0 | 0.000 |
0 | 0 | 0.000 |
0 | 0 | 0.000 |
Price($) | Vol. | No. |
---|---|---|
0.003 | 19838689 | 19 |
0.004 | 4380859 | 7 |
0.005 | 889000 | 1 |
0.006 | 166666 | 1 |
0.016 | 4926376 | 1 |
Last trade - 12.15pm 23/08/2024 (20 minute delay) ? |
Featured News
PRX (ASX) Chart |
The Watchlist
SER
STRATEGIC ENERGY RESOURCES LIMITED
David DeTata, Managing Director
David DeTata
Managing Director
SPONSORED BY The Market Online