“In July, the gold net-short positions reached record highs. When gold began to rebound last month, a massive number of shorts were left exposed and many still remain exposed. Gold shorts are stuck holding the losing bet on an asset that is going to do the opposite of what they anticipated. If the price rally continues, these traders will feel increasing pressure to unwind their shorts before their losses become catastrophic. This ‘short squeeze,’ as it is known in finance, will reverse the vicious cycle and could send gold dramatically higher than when the correction started.”
