Best of the Week
Most Popular
1. Will Gold Price Breakout? 3 Things to Watch… - Jordan_Roy_Byrne
2.China Invades Saudi Oil Realm: PetroDollar Kill - Jim_Willie_CB
3.Bitcoin Price Trend Forecast, Paypal FUD Fake Cryptocurrency Warning - Nadeem_Walayat
4.The Stock Market Trend is Your Friend ’til the Very End - Rambus_Chartology
5.This Isn’t Your Grandfather’s (1960s) Inflation Scare - F_F_Wiley
6.GDX Gold Mining Stocks Fundamentals - Zeal_LLC
7.US Housing Real Estate Market and Banking Pressures Are Building - Chris_Vermeulen
8.Return of Stock Market Volatility Amidst Political Chaos and Uncertain Economy - Buildadv
9.Can Bitcoin Price Rally Continue After Paypal Fake FUD Attack? - Nadeem_Walayat
10.Warning Economic Implosion on the Horizon - Chris_Vermeulen
Last 7 days
What to Expect at a Critical Stock Market Point: End of a Wave 2 Rally - 26th Apr 18
A New Lithium War Is About To Begin, Modern Gold Rush! - 26th Apr 18
Silver, silver, and silver! There’s More Than Silver, People! - 26th Apr 18
How to be Financially Prepared When Purchasing Your First Home - 26th Apr 18
Is a Stock Market Crash Imminent or Does this Stock Market Bull Still Have Legs - 25th Apr 18
Gold Price Focusing on May Cycle Bottom - 25th Apr 18
Cash “Vanishes” From Bank Accounts In Ireland - 25th Apr 18
Is the Malaysian Economy a Potemkin Village - 25th Apr 18
Land Rover Discovery Sport Rattling / Knocking Sounds From Car Pillars - 25th Apr 18
China Takes the Long View on Gold-Silver... and So Should You - 25th Apr 18
Russia Buys 300,000 Ounces Of Gold In March – Nears 2,000 Tons In Gold Reserves - 24th Apr 18
Stock Market Study Shows Why You Shouldn’t “Sell in May and Go Away” - 24th Apr 18
CRYPTOCURRENCY MASTERCLASS #CRY90 - 24th Apr 18
UK Gambling Statistics - What the Numbers Say - 24th Apr 18
Chaos Capitalists Short Countries - How Chanos Got China Wrong - 24th Apr
Artificial Intelligence Defines the Political News Narrative - 24th Apr 18
Stock Market "Oops, They Did It Again" - 24th Apr 18
Fox in the Henhouse: Why Interest Rates Are Rising - 23rd Apr 18
Stocks and Bonds, This is Not a Market - 23rd Apr 18
Happy Anniversary Silver Investors! - 23rd Apr 18
The Hottest Commodity Play In 2018 - 23rd Apr 18
Stock Market Correction Turns Consolidation - 23rd Apr 18
Silver Squeeze, Gold Fails & GDX Breadth - 23rd Apr 18
US Economy Is Cooked, the Growth Cycle has Peaked - 23rd Apr 18
Inflation, With a Shelf Life - 23rd Apr 18 - Gary_Tanashian
Stock Market Predictive Modeling Is Calling For A Continued Rally - 22nd Apr 18
SWEATCOIN - Get PAID to WALK! Incentive to Burn Fat and Lose Weight - Review - 22nd Apr 18
Sheffield Local Elections 2018 Forecast Results - 22nd Apr 18
How Long Does it take for a 10%+ Stock Market Correction to Make New Highs - 21st Apr 18
Sheffield Ruling Labour Party Could Lose 10 Council Seats at May Local Elections - 21st Apr 18
Crude Oil Price Trend Forecast - Saudi Arabia $80 ARAMCO Stock IPO Target - 21st Apr 18
Gold Price Nearing Bull Market Breakout, Stocks to Follow - 20th Apr 18
What’s Bitcoin Really Worth? - 20th Apr 18
Stock Market May "Let Go" - 20th Apr 18
Overwhelming Evidence Against Near Stock Market Grand Supercycle Top - 20th Apr 18
Crude Oil Price Trend Forecast - Saudi's Want $100 for ARAMCO Stock IPO - 20th Apr 18
The Incredible Silver Trade – What You Need to Know - 20th Apr 18
Is War "Hell" for the Stock Market? - 19th Apr 18
Palladium Bullion Surges 17% In 9 Days On Russian Supply Concerns - 19th Apr 18
Breadth Study Suggests that Stock Market Bottom is Already In - 19th Apr 18
Allegory Regarding Investment Decisions Made On Basis Of Government’s Income Statement, Balance Sheet - 19th Apr 18
Gold – A Unique Repeat of the 2007 and How to Profit - 19th Apr 18
Abbeydale Park Rise Cherry Tree's in Blossom - Sheffield Street Tree Protests - 19th Apr 18
The Stock Market “Turn of the Month Effect” Exists in 11 of 11 Countries - 18th Apr 18
Winter is Coming - Coming Storms Will Bring Out the Best and Worst in Humanity - 18th Apr 18
What Does it Take to Create Living Wage Jobs? - 18th Apr 18
Gold and Silver Buy Signals - 18th Apr 18
WINTER IS COMING - The Ongoing Fourth Turning Crisis Part2 - 18th Apr 18
A Stock Market Rally on Low Volume is NOT Bearish - 17th Apr 18
Three Gold Charts, One Big Gold Stocks Opportunity - 17th Apr 18
Crude Oil Price As Bullish as it Seems? - 17th Apr 18
A Good Time to Buy Facebook? - 17th Apr 18
THE Financial Crisis Acronym of 2008 is Sounding Another Alarm - 16th Apr 18
Bombs, Missiles and War – What to Expect Next from the Stock Market - 16th Apr 18
Global Debt Bubble Hits New All Time High – One Quadrillion Reasons To Buy Gold - 16th Apr 18
Will Bitcoin Ever Recover? - 16th Apr 18
Stock Market Futures Bounce, But Stopped at Trendline - 16th Apr 18
How To Profit As Oil Prices Explode - 16th Apr 18
Junior Mining Stocks are Close to Breaking Downtrend - 16th Apr 18
Look Inside a Caravan at UK Holiday Park for Summer 2018 - Hoseasons Cayton Bay Sea Side - 16th Apr 18
Stock Market More Weakness? How Much? - 15th Apr 18
Time for the Gold Bulls to Show their Mettle - 15th Apr 18
Trading Markets Amid Sound of Wars - 15th Apr 18
Sugar Commodity Buying Levels Analysis - 14th Apr 18
The Oil Trade May Be Coming Alive - 14th Apr 18

Market Oracle FREE Newsletter

Trading Lessons

Gold Commitments of Traders and More

Commodities / Gold and Silver 2016 May 01, 2016 - 02:59 PM GMT

By: Dan_Norcini

Commodities

Gold is showing some very good strength at this time, as the weaker dollar, combined with negative interest rates, and in some instances, NEGATIVE REAL RATES, has made the opportunity cost in holding the metal practically non-existent. Throw in the continued uncertainty over global equity market valuations, and gold demand continues to remain strong. As noted previously however,the recent lackluster interest in GLD is on my radar screen however.


GLD Gold Holdings versus Gold Price

While gold is at its highest level on the charts since January 2015, the reported holdings in GLD are actually below their peak this year in the last week of March. Precisely, at that time, there were 823 tons reported in GLD; this past Friday there were 804, a difference of 19 tons.

Total tonnage in GLD does however remain 162 tons higher than at the start of the year. Thus, while the recent poor showing in the reported holdings of GLD is noteworthy, overall we have not as yet seen anything that would suggest a sharp change in sentiment towards gold among Western-based investors.

I was disappointed in seeing a mere 1.6 ton increase in reported gold holdings since Wednesday, especially when one considers the dovish FOMC statement and the Bank of Japan policy announcement that sent the Yen soaring and the Dollar sharply lower. I would have thought we would see at least a 8-10 ton increase. Maybe we will see that next week. Then again, maybe we will not! Who knows?

Incidentally, here is an updated chart noting the gold price and looking at the yield curve as illustrated by mapping the spread between the Ten Year Treasury and the Two Year Treasury.

Ten Year - Two Year Spread

There is still nothing in this spread that would indicate the interest rate markets are the least bit concerned about inflationary pressures building in the US economy. While the spread has steepened from its tightest levels seen in early March of this year, it remains well below where it was a year ago.

I keep referring to this spread because I keep trying to ascertain whether this commodity buying binge has anything fundamental behind it or if the entire thing is merely a function of the weaker Dollar generating hot money flows into a beaten down sector in the hopes of picking up some fast money. Until I see evidence that this spread is suggesting more rapid growth I will be inclined to believe that while this recent push higher across so many metals markets has been impressive, the fundamental underpinnings needed to sustain these higher prices is missing. We'll just have to keep watching to see how things unfold.

Back to the COT stuff...

Through Tuesday of this past week, there was little in the way of significant changes to the positioning of the players.

GLD Gold Holdings versus Gold Price Chart 2

Disaggregated CoT

There was a slight reduction in the net long position of the hedge funds and a slight reduction in the net short positions of the Commercials and Swap Dealers. It should be noted however, that all of the significant events that impacted the gold price in such a positive manner happened AFTER the Tuesday cutoff date. I am of course referring to the FOMC and the BOJ.

In looking at the hedge fund position alone, you can see that it remains elevated but is below previous record highs.

Hedge Funds Net Positions in Gold

Here is a chart showing the hedge fund OUTRIGHT positions and the gold price.

Hedge Fund Longs and Shorts

Note that compared to previous high points in the outright long position by this group of traders, that there remains more skeptics as their outright short position still remains larger than at other peaks in the long position.

There is therefore additional fuel for further gains should technical chart levels get tripped to the upside that would force these short positions to be covered.

Another look, based on percentages of combined large spec longs versus combined commercials and swap dealer shorts is rather interesting.

CoT

While the combined Commercial and Swap Dealer short position remains well below its previous peak above 60% back in 2011, the combined large spec long position is at an all time record high.

Some of this is due to the fact that a fair number of spreads were taken off this past week and that drops the overall total open interest making the naked futures and options positions take on a greater weighting when measured in this manner.

Total Open Interest and Spreads

While I am alarmed by what I see in silver, the recent COT report for gold does not give me any cause for concern. At least not yet.

In taking a look at the intermediate term or weekly chart, gold has put in the highest WEEKLY CLOSE since the last week of January 2015.

Gold Weekly Chart

As you can see, the last 3 months or so, it has spent moving sideways just below $1300 and above roughly $1220. A weekly close above psychologically significant $1300 would allow this market to have a real shot at getting to $1340-$1350.

Above that and you have to put $1400 into play.

As long as the Dollar remains weak, gold will garner buying support. It will however need some catalyst to send hot money flows really flooding into it.

In the greater scheme of things, gold entered into a bear market when it lost weekly chart support near $1525 in 2013. It had since fallen as low as $1050 ( round number) before finding a solid bottom and recovering in price.

It has since recovered HALF OF THOSE LOSSES by moving above $1287.50, the halfway point between those two numbers. While impressive, it has a long way yet to go to make it back to $1520. Maybe it will, maybe it won't. The truth is no one, including the gold perma bull cult leaders, have any idea where this market is headed in price. Before it moves to the price that some of them are already back announcing once again ( these people simply never stop with their "to the moon" predictions) let's first see if it can manage to get back above $1525, and then we can talk about $1800. Until then, all such wild claims are simply that - wild claims by those who have a vested financial interest in promoting all things gold.

I have said it before and will say so again - you own gold for protection/insurance against monetary disorder and in times of economic uncertainty. It provides peace of mind. One does not cheer on the burning down of their own home in order to collect on the insurance.

That is the reason I still cannot stomach so many of these gold cult members who seem to not understand that when they are cheering on predictions of $5000, $50,000 ,etc gold prices,they are cheering on the ruin of everything around them. There is something seriously wrong with people who have that sort of mindset. It is almost pathological when one's entire focus of life is the latest gold price quote.

Personally, I would love nothing better than to be able to completely ignore the price of gold. That would entail a stable, sound currency, a government that runs a balanced budget, a responsible Federal Reserve that has not sent interest rate levels so low that no senior citizen can possibly hope to live off of their life's savings, a stock market that is priced on sound valuations and is moving higher not because of gargantuan sums of cheap money that has been conjured into existence but is instead moving higher because the underlying economy is sound, with reasonable and not oppressive and idiotic government regulation and sound fiscal policy. If that were the case, and sadly it is not, we could safely ignore gold and let the gold cult have their closed meetings and preach to themselves. Wouldn't that be nice!

Sadly, as Solomon warned us so many years ago: "There is nothing new under the sun".

The world of gold will always be infested with hucksters, quacks, and charlatans that prey on the unsuspecting or the naive. As long as they can sell fear, and fear sells well, they will be among us.

That will never change.

That is the real tragedy here - because gold indeed has a role to play in our portfolios. Many who might otherwise consider owning it, do not, because they have been so badly burned by these quacks in the past that they want nothing to do with it, even when they should own some for peace of mind. That is the true legacy that so many of the gold hucksters have left in their wake of ruin and misery - not that they helped save some from ruin but that they directly led to the ruin of so many.

I have kept copies of the emails that i have received from so many of their victims to help remind me of the terrible trail of devastation inflicted upon their many victims. It just underscores why none of them are to be trusted, believed or listened to even when gold is moving higher.

Dan Norcini

http://traderdan.com

Dan Norcini is a professional off-the-floor commodities trader bringing more than 25 years experience in the markets to provide a trader's insight and commentary on the day's price action. His editorial contributions and supporting technical analysis charts cover a broad range of tradable entities including the precious metals and foreign exchange markets as well as the broader commodity world including the grain and livestock markets. He is a frequent contributor to both Reuters and Dow Jones as a market analyst for the livestock sector and can be on occasion be found as a source in the Wall Street Journal's commodities section. Trader Dan has also been a regular contributor in the past at Jim Sinclair's JS Mineset and King News World as well as may other Precious Metals oriented websites.

Copyright © 2016 Dan Norcini - All Rights Reserved

All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise. The information on this site has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. Accordingly, investors should not act on any information on this site without obtaining specific advice from their financial advisor. Past performance is no guarantee of future results.

Dan Norcini Archive

© 2005-2018 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