The odds of a default of the COMEX exchange is increasing by the day. The spread between paper gold and physical gold has increased at an alarming rate. Central banks and other bullion banks are expecting a sharp rise in the price of the physical metal, evidenced by the lease rates which have exploded over the past few months. Short term lease rates are up a couple hundred percent. This is going to make it harder for the exchange to acquire the physical metal for December delivery during a time where demand for physical gold and silver is extremely high.
If COMEX fails to deliver for December delivery, short sellers in the gold and silver futures will have to cover their short positions. This could lead to a gigantic short squeeze in a market that is high on demand. Gold & Silver prices could EXPLODE higher in a matter of days.
It has been interesting to watch these gold and silver mining shares lose 90 to 95% of their value in some cases. I think the delevering of hedge funds was primarily the culprit, and we may be witnessing the buys of a lifetime here. I like the following stocks in this sector: GG, AUY, HMY, AU, AEM, GFI; however, I do believe silver stocks will outperform on the nxext run. I like HL, SSRI, PAAS, and SLW as pure silver plays. There are some major bargains/speculative bets out there as well which could pay out huge dividends if there is a run on gold and silver. CDE, GSS, NXG are a couple of smaller names which could explode higher.
