Gold has suffered brutal, withering selling pressure in the month following the US presidential election. The stock markets’ surprise surge after Trump’s surprise win has led speculators and investors alike to rush for the gold exits. As usual the former group’s extreme selling came largely through gold futures. But this gold-futures dumping has been so severe that it is rapidly exhausting itself, a bullish omen for gold.

Gold’s stunning post-election selloff resulted from a united mass exodus by gold’s two dominant groups of traders. Speculators ferociously dumped gold futures with an intensity rarely witnessed, while stock investors jettisoned shares in the leading GLD gold ETF far faster than gold itself was falling. With so much gold being spewed into the markets so rapidly, this metal didn’t have a chance of staying on its feet.

Gold futures had actually skyrocketed on election night, up 4.8% to $1337 as Trump’s perceived odds of winning started to soar. But once the plummeting stock markets rebounded violently, the gold selling began. And it soon intensified after the election. Not only did stock markets shockingly surge to new all-time record highs, but the US Dollar Index blasted up to a major new 13.7-year secular high of its own.

Gold has always been a contrarian anti-stock trade. As a rare asset that moves counter to stocks, gold’s critical investment demand is heavily dependent on stock-market fortunes. Investors alternatively flock to gold to diversify their stock-heavy portfolios when stock markets fall, and then abandon it as stocks soar again. The exceedingly-strong post-election stock markets swiftly slayed gold investment demand.

Record stock-market highs breed extreme euphoria and complacency. Traders naturally start to believe stocks do nothing but rally indefinitely. Thus their interest in deploying capital in counter-moving gold fades to oblivion. And since investment demand fueled the great lion’s share of gold’s new bull market this year, this metal couldn’t stand without it. Gold’s recent cratering resulted from euphoric stock sentiment.

While speculators’ extreme gold-futures selling and investors’ extreme GLD-share selling over the past month share the blame, that’s too much to cover in a single essay.  o this week I’m focusing on the gold-futures side. While the massive post-election gold-futures dump was miserably painful, it looks to be exhausting itself which is very bullish. The finite supply of gold futures to sell is rapidly dwindling.

Gold futures have a wildly-outsized impact on gold prices, dominating short-term action. Futures offer radical leverage far beyond the decades-old legal limit in the stock markets of 2.0x. Every gold-futures contract controls 100 troy ounces of gold. At $1175, that’s worth $117,500. But the maintenance margin required to own each contract is just $6000 this week, enabling maximum leverage running way up at 19.6x!

And that’s actually fairly modest for gold-futures trading, with 25x+ being common when gold hasn’t just plunged. Even at 20x, each dollar of capital speculators trade in the futures market commands 20x the impact of a dollar invested in gold outright! So when speculators as a herd aggressively buy or sell gold futures, the gold price moves fast. Their collective amplified power to move gold is immense and unparalleled.

Exacerbating their utter dominance over this metal’s short-term fortunes is the fact that gold’s reference price traders watch is that very futures one. So when futures speculators bully gold around with their extreme leverage, investors are quick to react which intensifies gold’s moves. Contrarian investors have long decried this blatantly-unfair-if-not-absurd gold-market structure granting futures speculators such supremacy.

Further complicating this whole messy situation, gold-futures speculators’ trading activities are obscured by low-resolution data. Not only are their trades only reported once a week, but even that happens with a 3-trading-day delay! This effectively hides what gold-futures speculators are doing from wider scrutiny by investors and analysts. This lack of futures transparency has long been a serious problem for gold.

Because of gold futures’ extreme inherent leverage, speculators must maintain an ultra-short-term focus to survive. At 20x, a mere 5% adverse gold move will wipe out 100% of their capital risked! So countless times when gold-futures trading on mere herd sentiment drives big gold moves, the day it happens the resulting volatile price action is wrongly and falsely attributed to fundamental changes in the world gold market.

Speculators’ collective gold-futures positions are published late every Friday afternoon in the famous Commitments of Traders reports from the CFTC.  Those are already old though, current to the week that ended the preceding Tuesday. Thus speculators’ market-moving gold-futures trading activity is hidden for up to 8 trading days, which is inexcusable in this information age. Maybe Trump’s people can fix this.