US DOLLAR ready to get CLOBBRED 4-Jan-10 09:22 pm

THE US DOLLAR is getting ready to GET CLOBBERED

The weekly COT REPORT came out today a day late because of the HOLIDAYS last week. Not much changed in SILVER, but GOLD did liquidate over 4,000 short contracts. Look at the figures below:

COT REPORT DEC 29

SILVER COMMERICALS

LONGS +378 @ 27,360 or 22% of open interest
SHORTS +568 @ 84,710 or 68.1% of open interest

GOLD COMMERCIALS

LONGS +2,204 @ 98,841 or 19.3% of open interest
SHORTS -4,519 @ 373,783 or 76% of open interest


Even though there has been some liquidation of the COMMERCIAL SHORTS in GOLD and SILVER, the relative SHORT open interests in both precious metals are still very high. Gold has a much higher short open interest at 76% compared to silver at 68%. When SILVER hit its low in NOV 2008, the COMMERICAL SHORT open interest was at 49%, in GOLD it was 50.7%. Even though this may seem BEARISH for GOLD and SILVER, things are much different today than they were in NOV 2008.

Lets take a look at the US DOLLAR COT REPORTS over the past several weeks:

US DOLLAR COMMERCIAL COT POSITIONS 2009

NOV 17 REPORT

LONGS +372 @ 14,790 or 35.4% of open interest
SHORTS +3,642 @ 12,394 or 29.3% of open interest

DEC 8 REPORT

LONGS +651 @ 10,141 or 20.9% of open interest
SHORTS +11,087 @ 25,222 or 51.9% of open interest

DEC 15 REPORT

LONGS -4,704 @ 5,437 or 10.6% of open interest
SHORTS +7,507 @ 32,729 or 63.8% of open interest

DEC 22 REPORT

LONGS +311 @ 5,748 or 9.6% of open interest
SHORTS +9.015 @41,744 or 69.8% of open interest

DEC 29 REPORT

LONGS +18 @ 5,766 or 9.1% of open interest
SHORTS +5,049 @ 46,793 or 74.1% of open interest


If you look at the figures above you will see that the COMMERICALS are getting ready to CLOBBER the US DOLLAR. On NOV 17 the COMMERICALS only had 12,394 SHORT positions on the US DOLLAR. They have added some 34,000 SHORT POSITIONS and have increased the short open interest from 29.3% to a whopping 74.1% (these are highlighted in RED)

This is good for the GOLD and SILVER INVESTORS, but it is only part of the story. As I mentioned above, the net SHORT POSITIONS in GOLD and SILVER are still quite high compared to the low of NOV 2008. But the difference today, we have the US DOLLAR SHORT POSTIONS at a record high the same as it was in NOV 2008. Look Below:

US DOLLAR COT POSITIONS

NOV 11 2008

LONGS 12,691 or 32.8% of open interest
SHORTS 33,891 or 87.9% of open interest

DEC 29 2009

LONGS 5,766 or 9.1% of open interest
SHORTS 46,793 or 74.1% of open interest


When SILVER and GOLD were ready to take off from their EXTREME LOWS in NOV 2008, the US DOLLAR was heavily SHORTED. Today, on JAN 4, we still have GOLD and SILVER relatively high short positions compared to NOV 2008, but the US DOLLAR is extremely SHORTED again. We are going to see the US DOLLAR head lower in the next several weeks-months.

This goes along with the DOLLAR CARRY TRADE, not allowing the US DOLLAR to rally all that much. Too many hedge funds, large investors and banks borrowing DOLLARS at a zero percentage and buying GOLD and etc. As the US DOLLAR rallies off its lows the past month, it allows those in the US DOLLAR CARRY TRADE another opportunity to buy DOLLARS at an even higher rate, making money as the DOLLAR gets crushed when it goes much lower.

The US DOLLAR is heading lower with this kind of extreme COMMERICAL SHORTING. With the tightness of the physical bullion markets and the still relatively high net short positions in GOLD and SILVER, looks like we will see fireworks in 2010.