- Art Cashin Warns Of Potential Massive Short Covering In Gold!
Today 50-year veteran Art Cashin warned King World News that if the gold market holds its recent lows we may see a massive upside spike in gold because of panicked short covering. Cashin, Director of Floor Operations at UBS ($650 billion under management), also warned that the Fed’s position is becoming increasingly desperate.
Eric King: “What about the gold market? We are seeing record short positions by hedge funds and the public. What could this mean for the gold market going forward, Art?”
Cashin: “It could be dramatic. You’ve got a couple of things going on: You saw what is called a ‘backwardation’ in the gold futures. That has occurred, don’t hold me to this, but I think about four times over the last 10 years or so, and it’s usually been at or around a bottom in gold.
So you’ve got the possibility of that working for you. Then, when Bernanke made his speech that caught some of the (gold) shorts off base. It could have a dramatic effect because there are a lot of shorts in gold. I personally would like to see if we get another retest of the bottom. That could be truly dramatic if we go down again and retest that bottom and it holds. These already nervous shorts could react.
Remember, short covering is rarely a rational, thought-out event. It is nervousness. It tends to come from near panic, and it’s always emotional. That’s why it always looks so dramatic when its on the tape.”