>I think that you posted something about Sinclair saying in Toronto that the black >boxes are using derivative formulae to play/short the lesser pm stocks.

>If this is the case is it not reasonable to think that part of the plan is to cover the >shorts?  If so, then let us think about a time frame for this.  Would not a major >market meltdown, say late this year into a bear market low many months from now >be the time to do this? 

I know Jim thinks that the shorts are going to have one heck of a time covering. And as he says, they can’t make a profit, until they cover. He says that his recommendation to obtain one’s share certificates was made solely for the investor’s protection, but that the resulting removal of shares from the shorting scheme was a wonderful side benefit.  

I have the feeling that the shorts don’t have a plan, but you may be right. I think they are arrogant mainstream investors who don’t understand the fundamentals of this market, and they think that gold will peak as it did in 1980, and that the shares will all perform cliff diving acts!  Look at how many of our own gang here at the tent are worried about gold and the mining shares topping out, with a long and protracted correction to follow. If even we tend to question our medium to long term views, imagine the typical mainstream investor’s view of where gold is headed. To him, this run to nearly $1000 has been a fluky abberation.

>We could assume, like some do, that these black box shorts are simply nutjobs; what >if they believe with good cause that at some later date they will have ample room to >cover?

If we are dealing with true “black box” trading and not just a bunch of Joe Daytraders, the black box systems (from my limited understanding) trade using mathematical formulas based on relationships between other commodities and assets classes. They sniff out recurring patterns and relationships and trade based on those historical relationships. With that in mind, their own system will eventually identify that a major trend change is occurring, such as a big break out in the junior gold stocks, and the system will identify the need to exit their trades. The question will be CAN they do so, and at what price. Jim has made statements to the effect that the juniors will eventually blast off in a way few can imagine. This is definitely quite possible when we enter the next leg up that includes large buying in the juniors. I know it is VERY tedious waiting, but I can picture that scenario playing out.

>For those wondering about this let’s look at a similar question;  what caused the HUI >to rise into a bull phase from its low near 35?  The factors that caused this are a >mystery, unless someone would like to explain them.   Since the factors are a >mystery, could they not appear again at another bear market low in the pm stocks?

I wasn’t around at the start of the run from 35. I was busy accumulating physical, so will have to leave that discussion for others. I would imagine that people saw the reversal of gold’s downward trend, and started buying the mining shares to get the additional leverage during the move up.