Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24
How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - 17th Feb 24
Why Rising Shipping Costs Won't Cause Inflation - 17th Feb 24
Intensive 6 Week Stock Market Elliott Wave Training Course - 17th Feb 24
INFLATION and the Stock Market Trend - 17th Feb 24
GameStop (GME): 88% Shellacking Yet No Lesson Learned - 17th Feb 24
Nick Millican Explains Real Estate Investment in a Changing World - 17th Feb 24
US Stock Market Addicted to Deficit Spending - 7th Feb 24
Stocks Bull Market Commands It All For Now - 7th Feb 24
Financial Markets Narrative Nonsense - 7th Feb 24
Gold Price Long-Term Outlook Could Not Look Better - 7th Feb 24
Stock Market QE4EVER - 7th Feb 24
Learn How to Accumulate and Distribute (Trim) Stock Positions to Maximise Profits - Investing 101 - 5th Feb 24
US Exponential Budget Deficit - 5th Feb 24
Gold Tipping Points That Investors Shouldn’t Miss - 5th Feb 24
Banking Crisis Quietly Brewing - 5th Feb 24
Stock Market Major Market lows by Calendar Month - 4th Feb 24
Gold Price’s Rally is Normal, but Is It Really Bullish? - 4th Feb 24
More Problems in US Regional Banking System: Where There's Fire There's Smoke - 4th Feb 24
New Hints of US Election Year Market Interventions & Turmoil - 4th Feb 24
Watch Consumer Spending to Know When the Fed Will Cut Interest Rates - 4th Feb 24
STOCK MARKET DISCOUNTING EVENTS BIG PICTURE - 31st Jan 24
Blue Skies Ahead As Stock Market Is Expected To Continue Much Higher - 31st Jan 24
What the Stock Market "Fear Index" VIX May Be Signaling - 31st Jan 24
Stock Market Trend Forecast Review - 31st Jan 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Long-Term CoT Perspective

Commodities / Gold & Silver 2020 Jan 30, 2020 - 12:36 PM GMT

By: Gary_Tanashian

Commodities

Because it’s so important to see this correctly and not pretend we (well, I) know more than we (I) actually do I find it important to look at pictorial representations of history and think about them when I get some quiet time (ha ha ha, like not on Twitter, not reading financial/gold websites and most certainly not watching TeeVee finance and news).

So I am thinking about the Commitments of Traders alignment with respect to the gold price once again. That would be the same CoT that has doggedly hung a poor risk vs. reward sign out over the sector from a sentiment standpoint since the summer.


Okay, so the Specs are way more net long than they were in May. The Commercials (hedgers and nefarious goons alike) are way more net short. Below is a chart that I grabbed from this website and marked up. It’s pretty big, so click it and get the full view.

Assuming this chart’s historical data is correct I’ve marked it up to show why any undue alarm about the “record net shorts” in Commercial interests is just that, undue. That does not mean risk is not elevated by this sentiment measure; it is. But as often noted in NFTRH Premium and here at nftrh.com, the internal dynamics of the gold market are much different than the majority of the comps that RECORD NET SHORTS BY THE SMART MONEY!!! hysteria would imply.

First of all, the goons are not smart money. They are as a whole doing what they always do, hedging. There are gold mining companies and gold industry users in there as well, short the metal. The goons will be on the right side at the next turn, after having been on the supposed wrong side all through the rally. At that point some wise guys looking to harvest the eyeballs of the gullible will pronounce for all to read that the ‘smart money has fleeced the golden sheep once again’ or some such thing.

It’s as simple as this. Yes the readings of net longs and net shorts are pushed to historical extremes. But that means little more than it has meant throughout the post-2000 history each time the readings have approached the green and red arrows. I’ve long noted that the internal dynamics of the gold market are different now than at any time in history. This chart explains in a handy view of volume.

There is much more volume interest in gold now and so it follows that the net positioning of players within the market will be much greater as well, even when merely at a normal extreme, as with the 2007 and 2016 extremes, for example.

But the chart also shows something we’ve reviewed in the past with respect to the early phase of the previous bull market (“bull rules are different than bear rules”, right?). Gold spent a fair amount of time with the readings at extremes while the metal continued to rise (with all due volatility, as it’s the gold market after all). 2005 jumps off the chart as one of those times as gold accelerated higher despite CoT extremes. 2009 to the cycle’s end in 2011 is another.

The bottom line is as usual; calm the noise, see the noise makers for what they are * and keep your head screwed on straight. That means checking it (your head, not necessarily the gold price :-)) every day to make sure the brain inside it is not being swayed by sensation as opposed to reality. This applies throughout the financial markets.

* Either well marketed entities that seek to rile up the herd’s emotions (and harvest their eyeballs) as a matter of doing business or those doing so unwittingly through incomplete or lazy analysis.

Subscribe to NFTRH Premium (monthly at USD $33.50 or a 14% discounted yearly at USD $345.00) for an in-depth weekly market report, interim market updates and NFTRH+ chart and trade setup ideas, all archived/posted at the site and delivered to your inbox.

You can also keep up to date with plenty of actionable public content at NFTRH.com by using the email form on the right sidebar and get even more by joining our free eLetter. Or follow via Twitter ;@BiiwiiNFTRH, StockTwits or RSS. Also check out the quality market writers at Biiwii.com.

By Gary Tanashian

http://biiwii.com

© 2020 Copyright  Gary Tanashian - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Gary Tanashian Archive

© 2005-2022 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