Nickel, Zinc & Silver – section (a)

To start off, I must acknowledge Rafi Farber of “the End Game Investor” here, because much of the material in this video and the next this is based on three videos that he has produced and released on YouTube.

The titles of the three videos are …
“Why Nickel exploded and what it means for Gold and Gold stocks”
“Nickel LME fiasco shows how the end game will play out with Gold futures”
“What happens to Silver when Zinc gets squeezed?”

I would highly recommend you watching these videos.

So this is a compilation and retelling of these particular videos. I thought that this was important information that needed to be shared.

I must also say that he has a far greater understanding of the technical side of things than I do. I certainly am no expert when it comes to the technicals. I respect him and defer to his superior knowledge.

I should also say that some of what I shall talk about here is gleaned from other sources besides Rafi Farber.

But anyway, that said, let’s begin.

In early March of this year, the price of Nickel spiked some 250% in only a couple of days trading.

When this happened, those traders holding short positions found themselves in a little bit of trouble. For any Americans listening, that’s just British understatement … by “little bit of trouble” I actually mean “a great deal of trouble” …

For those of you who don’t know .. a short position is a bet against the market. They are of the opinion that the market will go down and they take positions in accord with this.

Metal producers tend to take short positions in metals futures in order to lock in prices. They then deliver against these future contracts. They do this as a hedge for their physical stocks of metal.

Speculators also take short positions in order to turn a profit.

In any event, if the market rises all of a sudden, these shorts can get caught out.

And this is what happened.

When the Nickel price began to rise, the shorts tried to exit their positions as soon as they could, selling even if this meant selling at a loss because they feared even greater losses if they didn’t sell.