Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
Can We Lock Up Rachel Maddow Now? - 25th Mar 19
Real US National Debt Might Be $230 Trillion - 25th Mar 19
Friday's Stock Market Sell-Off - New Downtrend or Just Correction? - 25th Mar 19
20 Days Left to Find Buying Opportunities In Gold - 25th Mar 19
Will the Historic Imbalance in Gold Stocks to Gold Price Resolve ? - 25th Mar 19
EasySMX Wireless Games Controllers Review - 25th Mar 19
Stock Market Short-term Top - 25th Mar 19
UK Population Growth - Latest ONS Immigration Statistics and Consequences - 24th Mar 19
The Fed Follows Trump's Tweets, And Does The Right Thing - 24th Mar 19
Yield Curves, 2yr Yield, SPX Stocks and a Crack Up Boom? - 24th Mar 19
Risk/Reward in Silver Favors Buying Now, Not Waiting for Big Moves - 23rd Mar 19
Similarities Between Stock Market Today and Previous Bull Market Tops - 23rd Mar 19
Stock Market DOW Seasonal Trend Analysis - 23rd Mar 19
US Dollar Breakdown on Fed Was Much Worse Than It Looks - 23rd Mar 19
Gold Mid-Tier GDXJ Stocks Fundamentals - 23rd Mar 19
Which Currency Pairs Stand to Benefit from Prevailing Risk Aversion? - 23rd Mar 19
If You Get These 3 Things Right, You’ll Never Have to Worry About Money - 22nd Mar 19
March 2019 Cryptocurrency Technical Analysis - 22nd Mar 19
Turkey Tourist Fakes Market Bargains Haggling Top Tips - 22nd Mar 19
Next Recession: Finding A 48% Yield Amid The Ruins - 22nd Mar 19
Your Future Stock Returns Might Unpleasantly Surprise You - 22nd Mar 19
Fed Acknowledges “Recession Risks”. Run for the Hills! - 22nd Mar 19
Will Bridging Loans Grow in Demand and Usage in 2019? - 22nd Mar 19
Does Fed Know Something Gold Investors Do Not Know? - 21st Mar 19
Gold …Some Confirmations to Watch For - 21st Mar 19
UKIP No Longer About BrExit, Becomes BNP 2.0, Muslim Hate Party - 21st Mar 19
A Message to the Gold Bulls: Relying on the CoT Gives You A False Sense of Security - 20th Mar 19
The Secret to Funding a Green New Deal - 20th Mar 19
Vietnam, Part I: Colonialism and National Liberation - 20th Mar 19
Will the Fed Cut its Interest Rate Forecast, Pushing Gold Higher? - 20th Mar 19
Dow Jones Stock Market Topping Pattern - 20th Mar 19
Gold Stocks Outperform Gold but Not Stocks - 20th Mar 19
Here’s What You’re Not Hearing About the US - China Trade War - 20th Mar 19
US Overdosing on Debt - 19th Mar 19
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19
Gold Price Confirmation of the Warning - 18th Mar 19
Split Stock Market Warning - 18th Mar 19
Stock Market Trend Analysis 2019 - Video - 18th Mar 19
Best Precious Metals Investment and Trades for 2019 - 18th Mar 19
Hurdles for Gold Stocks - 18th Mar 19
Pento: Coming QE & Low Rates Will Be ‘Rocket Fuel for Gold’ - 18th Mar 19
"This is for Tommy Robinson" Shouts Knife Wielding White Supremacist Terrorist in London - 18th Mar 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast March to September 2019

Gold and Silver COT Update - Get 30,000 Coffins Ready...

Commodities / Gold and Silver 2016 Mar 13, 2016 - 05:48 PM GMT

By: Clive_Maund

Commodities

PM Sector longs have had a laugh at our expense over the past couple of weeks as gold has continued to edge higher after we called it down, but it is looking more and more like they will end up like those 4 fools in the classic Clint Eastwood Spaghetti Western, A Fistful of Dollars. Clint rides into a tiny flyblown town and the 4 fools shoot around his mule's feet. After advising the undertaker to Get 3 coffins ready, having made a slight underestimation, Clint returns and challenges the 4 fools by saying "When you apologize to my mule like I know you're going to". Needless to say they do not respond in the required manner to this demand and so Clint quickly dispatches them to the great satisfaction of the undertaker.


While the PM sector bulls have been working themselves up into a lather the Commercials have been piling up the shorts to a huge level, and since these guys are never seriously wrong, it means trouble, big trouble. If you go against them, especially at extremes, you are a fool. I have received any number of Emails in the recent past telling me that "It's different this time" and that the COTs don't matter etc, here is an example, which I have slightly edited with asterisks, because this is a family website where vulgarity is not permitted - "Same rules don't apply. Big demand no supply. Paper commercials can go fu** themselves. No one is going to sell their physical at these sh** prices." Now I don't think that I need to tell you that when primitives like this are bullish, it's time to watch out. I certainly do not believe that the Commercials are going to be outsmarted by people of this caliber.

Let's now proceed to look at the latest gold COT. We thought that it looked bearish a week ago, but Commercial short and Large Spec long positions have risen to an even bigger extreme, as the price has stalled out following a false upside breakout from a Pennant that we can see on the 1-year gold chart placed immediately beneath. This is now viewed as the perfect setup for a brutal smash, which is likely to occur very soon. While the fundamental trigger for such a drop is a matter of conjecture at this stage, one possibility is the announcement of a rate rise by the Fed next week that sends the dollar higher.

Gold CoT

Gold 1-Year Chart

What about silver's COT? After easing last week ahead of a sharp rally off the rising 50-day moving average, Commercial short positions are back up near to 7-year highs, and like the COT situation with gold, this means trouble.

Silver CoT

Silver 1-Year Chart

Meanwhile there has been a startling change in copper's COT, just as copper has reached a critical point on its charts, having just stalled out at its falling 200-day moving average. What appears to have happened here is that the Large Spec shorts suddenly lost their nerve and bailed, probably at the worst possible time as usual, enabling the Commercials to finish closing out their earlier extensive long positions for a whacking great profit. This sudden big drop in Commercial long positions makes copper look very vulnerable again here.

Copper CoT

Copper 1-Year Chart

Another extraordinary development of recent weeks is that while the broad US stockmarket has climbed higher and higher, its COT chart has become more and more bullish, the polar opposite of what you would expect if this was a bearmarket rally, with Commercial long positions continuing to climb as Small Specs pile the shorts on ever higher. This is a truly bizarre situation because the charts do look bearish. Since the Commercials are never seriously wrong we take this as a stern warning not to dare to short this market, and it could be an early warning that the market is going to abort, or break out above the confines of the giant Dome visible on long-term charts. While the reason or reasons for this are as ever a matter of speculation, a big one could be a torrent of funds flowing into US markets from around the world, as a flight to safety from other much more troubled parts of the world. If this is indeed a major reason, we could see both the dollar and US stockmarkets rising in tandem, which would of course take the wind out of gold's sails. However, should Commercial long and Large Spec short positions collapse as the Dome boundary on the S&P500 index is approached, we will stand ready to short it.

S&P500 CoT

S&P500 1-Year Chart

Conclusion: gold and silver Commercial shorts are at "nosebleed" levels calling for a smash soon, which might be precipitated by the Fed next week. Copper, after looking bullish for weeks, suddenly looks vulnerable, with Commercials rapidly liquidating nearly all their remaining longs. The broad stockmarket COTs are ever more bullish, suggesting that the Small Specs, who have been piling on the shorts, are going to be slaughtered. Oh, and by the way, my mistake, 40,000 coffins.

By Clive Maund
CliveMaund.com

For billing & subscription questions: subscriptions@clivemaund.com

© 2016 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

© 2005-2019 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

6 Critical Money Making Rules