Bill Fleckenstein makes the point that while prices plummeted, the gold and silver ETFs took in more metal. The money quote:
What this points out: The un-leveraged “cash-type” buyers are availing themselves of dips in price to get more exposure. Meanwhile, the leveraged futures traders are being forced to sell weakness. I recently beefed up my metals’ exposure and will now be at full strength as we head into the upcoming week’s data.
I think folks should keep that distinction in mind. Due to leverage, people who trade futures tend to chase strength and sell weakness, while cash buyers tend to do the opposite. That phenomenon is one reason why people who trade futures usually lose money.
