Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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