Best of the Week
Most Popular
1.UK General Election BBC Exit Polls Forecast Accuracy - Nadeem_Walayat
2.UK General Election 2017 Seats Final Forecast, Labour, Conservative Lib-Dem, SNP - Nadeem_Walayat
3.UK General Election 2017 Forecast: Conservative 358, Labour 212 Seats - Nadeem_Walayat
4.Theresa May to Resign, Fatal Error Was to Believe Worthless Opinion Polls! - Nadeem_Walayat
5.UK House Prices Forecast General Election 2017 Conservative Seats Result - Nadeem_Walayat
6.The Stock Market Crash of 2017 That Never Was But Could it Still Come to Pass? - Sol_Palha
7.[TRADE ALERT] Write This Gold Stock Ticker Down Now - WallStreetNation
8.UK General Election Results Map 2017 vs 2015 vs Opinion Polls - Nadeem_Walayat
9.Orphaned Poisoned Waters,Severe Chronic Water Shortage Imminent - Richard_Mills
10.How The Smart Money Is Playing The Lithium Boom - OilPrice_Com
Last 7 days
Is the Tech Stock Market Bloodbath is Finally Here? - 28th Jun 17
Crude Oil Sinks 20%: Why "Oversupply" Isn't the Half of It - 28th Jun 17
Important Money Management Tips For Teenagers - 28th Jun 17
The Coming Battery Bonanza - 28th Jun 17
Overlooked Stock Investments To Keep An Eye On in 2017 - 27th Jun 17
The Federal Reserve And Drug Addiction – A Prediction - 27th Jun 17
Charts Show Why Emerging Markets Will Be an Essential Part of Your Portfolio Going Forward - 27th Jun 17
Former Lehman Brothers Trader: I Bet My Reputation That Stocks Bubble Will Pop In A Year - 27th Jun 17
US Bonds and Related Market Indicators - 27th Jun 17
Stocks At Record Highs: Market Sentiment Still Bullish - 27th Jun 17
Stock Market Running Out of Steam - 27th Jun 17
Gold Back With A Vengeance As Bitcoin Bubble Bursts - 26th Jun 17
Crude Oil Trade & Nasdaq QQQ Update - 26th Jun 17
Gold and Silver Ongoing Consolidation May End Soon - 25th Jun 17
Dollar May Become “Local Currency of the U.S.” Only - 25th Jun 17
Sheffield Great Flood of 2007, 10 Years On - Unique Timeline of What Happened - 24th Jun 17
US Stock Market Correction Could be Underway - 24th Jun 17
Proof That This Economic Recovery Narrative is False - 24th Jun 17
Best Cash ISA for Soaring Inflation, Kent Reliance Illustrates the Great ISA Rip Off - 24th Jun 17
Gold Summer Doldrums - 23rd Jun 17
Hedgers Net Short the Euro, US Market Rotates; 2 Horsemen Set to Ride? - 23rd Jun 17
Nether Edge By Election Result: Labour Win Sheffield City Council Seat by 132 Votes - 23rd Jun 17
Grenfell Fire: 600 of 4000 Tower Blocks Ticking Time Bomb Death Traps! - 22nd Jun 17
Car Sales About To Go Over The Cliff - 22nd Jun 17
LOG 0.786 support in CRUDE OIL and COCOA - 22nd Jun 17
More Stock Market Fluctuations Along New Record Highs - 22nd Jun 17
Understanding true money, Pound Sterling must make another historic low, Euro and Gold outlook! - 22nd Jun 17
Green Party Could Control Sheffield City Council Balance of Power Local Election 2018 - 22nd Jun 17
Ratio Combo Charts : Hidden Clues to the Gold Market Puzzle - 22nd Jun 17
Steem Hard Forks & Now People Are Making Even More Money On Blockchain Steemit - 22nd Jun 17
4 Steps for Comparing Binary Options Providers - 22nd Jun 17
Nether Edge & Sharrow By-Election, Will Labour Lose Safe Council Seat, Sheffield? - 21st Jun 17
Stock Market SPX Making New Lows - 21st Jun 17
Your Future Wealth Depends on what You Decide to Keep and Invest in Now - 21st Jun 17
Either Bitcoin Will Fail OR Bitcoin Is A Government Invention Meant To Enslave... - 21st Jun 17
Strength in Gold and Silver Mining Stocks and Its Implications - 21st Jun 17
Inflation is No Longer in Stealth Mode - 21st Jun 17
CRUDE OIL UPDATE- “0.30 risk is cheap for changing implication!” - 20th Jun 17
Crude Oil Verifies Price Breakdown – Or Is It Something More? - 20th Jun 17
Trump Backs ISIS As He Pushes US Onto Brink of World War III With Russia - 20th Jun 17
Most Popular Auto Trading Tools for trading with Stock Markets - 20th Jun 17
GDXJ Gold Stocks Massacre: The Aftermath - 20th Jun 17
Why Walkers Crisps Pay Packet Promotion is RUBBISH! - 20th Jun 17

Market Oracle FREE Newsletter

The MRI 3D Report

Gold COTs Most Bullish for 14 Years, Call for a Sizeable Tradable Rally Soon...

Commodities / Gold and Silver 2015 Dec 02, 2015 - 03:03 PM GMT

By: Clive_Maund

Commodities

There is no need to mince words or beat around the bush with this update. The latest COTs for gold released yesterday showed another marked improvement so that they are now strongly and unequivocally bullish - in fact they are at their most positive since late 2001, that's 14 years.

We are not going to waste our time trying to figure out the reason or reasons for this, but possibly this situation suggests that the Fed is not going to raise rates this month as widely expected. If they don't, the dollar, which has wafted back to its highs on this expectation, will drop and the PM sector will rally.


Without further ado let's look at this latest COT now, with the 1-year chart for gold stacked above it for direct comparison. What is rather remarkable about gold's COTs in the recent past is how readings rapidly ballooned to bearish levels by early November, leading us to adopt a bearish stance and short the sector, which was the correct action, but in recent weeks Commercial short and Large Spec long positions have collapsed back rapidly towards the zero line, so that the picture has quickly switched from quite strongly bearish to strongly bullish in the space of a few weeks. We know from experience that the extremely low Commercial short position that now exists means that a sizeable and tradable rally is just around the corner, regardless of whether the long-term downtrend has ended or not, and we can therefore position ourselves accordingly.

Gold 1-Year Chart

Gold CoT

On the long-term Hedgers chart, which is a form of COT chart, we can see that we have the most positive readings since late 2001. So we should at least see a tradable rally, and these readings could mark the end of the bearmarket in gold, or rather the resumption of the long-term bullmarket after a long and deep correction. Certainly this is suggested as likely by the bombed out grossly undervalued mining stocks.

Gold Hedgers Position

What about silver? - its latest COT charts are not so bullish as those for gold, as they show room for further improvement. That's easy to figure. Gold's latest COT suggests that a rally is imminent, and if it is, "silver is going along for the ride".

Silver 1-Year Chart

Silver CoT

On the latest 1-year dollar index chart we can see that it is at a critical juncture, having risen to an important resistance level at its March highs. The "carrot" of a Fed interest rate rise this month is what has wafted the dollar higher in recent weeks, but clearly if this expected rise is not forthcoming, those who have been banking on it are going to throw a tantrum, perhaps like that woman at the airport in Hong Kong who missed her flight , and the dollar could react back hard, which would of course be the occasion for a sizeable rally by gold and silver. However, that doesn't mean that the dollar won't later turn around and break out to new highs. After all, the market always hangs on the Fed, and if they don't raise rates this month, well, maybe they will next month, or the month after that.

US Dollar Index 1-Year Chart

Some subscribers have written in to tell me that Martin Armstrong is still very bearish on gold, saying that it will drop to about $700 on a strong dollar. Maybe he's right and that will later happen, but it won't happen with the COTs like they are now, which are calling for an immediate tradable rally. As pragmatic traders we use the COTs to ride the coat tails of the Smart Money, and if they are positioned for a gold rally, then we'll do likewise, just like we did on the sharp drop of recent weeks. Meanwhile, Larry Edelson of Weiss Research, who has a good record, has turned bullish on gold, saying it is bottoming now. I am more inclined to agree with him, especially given the appalling extreme undervaluation of gold stocks right now, as repeatedly and rightly pointed out by Adam Hamilton. A big reason for gold to turn up soon is that the bond markets are no longer a safe haven and will left in tatters by a rolling wave of Sovereign debt defaults. If you want to know where we are in the larger scheme of things, take a look at the following picture, taken from the vantage point of Space.

Into the vortex

On the site we will detail a range of ways to capitalize on the upcoming gold rally - gold stocks, ETFs and Call options, to suit whatever level of risk you are comfortable with.

By Clive Maund
CliveMaund.com

For billing & subscription questions: subscriptions@clivemaund.com

© 2015 Clive Maund - The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maunds opinions are his own, and are not a recommendation or an offer to buy or sell securities. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

Clive Maund Archive

© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife