George Kleinman Calls for $800 Gold

As a followup to my $800 Gold prediction by August 1st, I note that George Kleinman writes about Gold, analysing open interest (OI), and comes to the same conclusion $800 for Gold.

He has followed the rise and fall of OI for 20 years and has some interesting and valuable information about the commodity that we can all use in the future, information that is not available to the stock trader. He writes

If prices are in an uptrend and open OI is falling, this is a bearish sign. The old longs, the “smart money” (after all they have been right to this point), are taking profits; they’re liquidating. They are replaced to some extent by new buyers who will not be as strong on balance, but the declining OI is an indication the weak shorts also are bailing. They will be replaced to an extent by new shorts who are stronger than the old shorts were.

The one thing I would point out, based on the reasoning of Bill Murphy at Le Metropole Cafe, is that OI should have built up faster than it actually did (see Kleinman’s chart). Murphy has argued that the very powerful bullion banks, as in Goldman Sachs, were covering their shorts like mad on any dips all the way up, offsetting new longs. That is why OI didn’t expand as much or as fast as the time in early 2006. Murphy kept saying that OI is still lower than in early 2006 and Gold is $100 higher. His call kept us in the move for a lot longer knowing that the shorts were trapped. At one point Murphy believed there was a 12,000 to 16,000 ton short position. He still believes it may be 10,000 to 14,000 tons short. In other words, we have a long way to go. Kleinman now is correctly calling for $800 Gold by viewing, based on his OI analysis (see Kleinman’s chart)

George Kleinman Gold Finance Mover Mike

One Response to “George Kleinman Calls for $800 Gold”

  1. Hi Mike,

    I read an article today in the Financial Review here in Sydney about mining companies in the US and Canada facing increasing level of industrial action. It went on to say that any stoppages will pushed metal prices even higher.

    When I first read your articles about Gold pushing past US$800 I was skeptical but since returning to your site and reading more of your articles and your reasons I am becoming convinced that it is only a matter of time.

    I have bullish on metals and gold for a long time but I initially did find an US$800 price a bit fanciful initially. Now I am beginning to think that your prediction will prove correct.

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