James Turk Sees Short Squeeze In Near Future

He did call one in August 1999, and Turk expects one in the near future:

Conditions are ripe for another short squeeze, which was a key element of my forecast for this year. Several big banks and others owe physical metal, but there is not sufficient metal available at current prices for them to purchase to enable them to cover their short positions, which is the important point. Physical metal cannot be conjured up out of thin air like dollars, euros, pounds and the world’s other fiat currencies that are merely intangible bookkeeping concepts. When a bullion bank owes physical metal, it must repay real – i.e., tangible – physical metal or default.

There is a huge naked short position out there. Much metal is owed, but not enough metal can be bought at the current price to enable the shorts to repay their gold debts. In fact, a squeeze has already begun. It began last summer when Greenlight, a large U.S. hedge fund switched out of GLD – the large gold ETF – into physical metal, and I expect the squeeze to continue. A price surge in gold and silver will be the inevitable result.

Of course, for such a squeeze to develop, traditions have to shift a bit. North American investors, unlike (say) Indian buyers, tend to prefer the convenience of "paper gold" to the security of owning physical metal. Cost differentials have a lot to do with it: for example, gold is cheaper in Kitco's gold pool than it is for the comparable weight of physical metal. Turk, et al. may be successful in prompting one, though.


On the same subject, Jim Rickards expects the same thing. Before It's News has summarized the points he made in a recent interview with Eric King.