AI
Sunday, May 16, 2004 5:36:11 PM
*** Gold COT's chart ***
(maximize your window)
Dan, What did I buy?
You ready? I'm going to shock you...as the say at the World Series of Poker..."All in..."
WHT, BGO, NG, NXG, NEM, RGLD, VGZ...heaviest in NG and BGO.
100% in now. Might even margin a little once we get started. 40% HUI haircut is about done. Not bearish anymore since all double top targets have been reached.
===============================================================
Hi ld,
Nice selection.... I own the first four on your list so I'm wishing you a double portion of the best of luck in the coming days.
Though the HUI haircut may indeed be about done, what, iyo, is the catalyst that will start the USD backsliding again?
Fwiw, I still don't feel that there can be a very spirited or lengthy rally w/o a commensurate weakening of the Dollar and I don't get the impression that the unwinding of the varied carry trade activities has come to an end.
On the other hand, Friday's gold CoT report was the friendliest set of numbers to the bullish cause that I have seen in the 30 or so months that I've been following them.
The net short "smart money" commercial trader position has dropped from 191K to 69K contracts (brown line) in the past four weeks while the net long "smart money" commerical trader position jumped more than 35K contracts in the same four week period. The % of commercial bullish posiitons has doubled from 17% to 35% since April 12th.
What may be more bullish, in my view, is that the theoretically "weak handed" small bullish speculators (yellow line) have reduced their net long positions by 21K contracts while the large speculators net longs positions (blue line) have dropped from 139K to 38K contracts in the same four week period.
Tho these 'trends' can continue for an indeterminate period, I tend to believe that we are near the bottom w/r to the PoG, but with the strong feeling that a weakening dollar is needed to complete the picture we gold buffs are longing (pun intended) to see, I'm prepared to wait it out, come rain or come shine. <vbg>
===============================================================
Some other CoT comments
From Jim Sinclair's site:
"Mo Town’s Mr. Lee” sees clearly the doers of the dirty deed when he says: “COT is the least short of gold since July of 2003. Largest speculators are the least short of gold since July of 2003. The positions held by both parties are at a point of reversal along the trend line defined at both the Up Trend line and Power Down Trend lines of the herewith faxed chart. These guys are using this decline - in all probability sponsored by them - to cover their shorts, reverse their stance and go long.
Well, let me say this Mo Town: "This game is for billions. People commit crimes for $50. What do you think is going on?"
Golden Comet “Mad Jack MyMoney,” reviewing these same figures, says: “COT has recognized the fundamentals of gold and is reversing their positions and getting long and longer. COT is joining Dr. No, Chung Phat and ABX on the buy side. How many more contracts does COT have to buy to start pushing the price of gold higher? They have increased their long position by 31,122 contracts since the price of gold dipped under $380."
From Dan Norcini @ The LeMetropole Cafe:
"Commitments of Traders this week is astonishing. A massive change is occurring in the composition of the gold market participants. As of this Tuesday, the fund category sold over 16,500 contracts, 11,578 of them being brand new shorts. The funds are now down to their smallest net long position since last July 2003 when the gold price was trading near $350. At that time the fund net long position was at 39,409. With today’s release their net short position is at 38,016. In looking back over the last year the lowest level the fund net long position reached was 21,000 or so in both April 2003 and July 2003. Both times saw that as the bottom for the gold price. We are about 17,000 contracts from that point and if the fund longs continue to liquidate at this rate and the fund shorts continue to add on at the current rate, we will be at that level within the next week or so. That should be interesting to watch to see if the pattern holds and the market then begins to move up.
Another very significant point - The commercial category DID EVERY BIT OF NET BUYING in the gold pit from May 5- May 11. That buying was to the tune of nearly 20,000 contracts. That is huge and I mean HUGE. They too are now down to the smallest net short position they have had since July 2003. The kind of buying now taking place is quality buying by jewelry and refining interests and such not to mention mining outfits who are eliminating hedges. The reason I state this is because the COMMERCIAL LONG category is now carrying the largest long position (83,705 longs) they have had in over a year and a half. As a matter of fact, the last time they were anywhere near this loaded on the long side was back in March 2003 when they were carrying a bit over 73,500 longs. That was two weeks before gold bottomed near 319 and then went directly to 372.
From where I am currently sitting, gold is coming to an important crossroads. If the composition continues to change the way it has been doing for some time now with the funds moving off the long end to the short side and big commercial interests either covering shorts or going long, gold needs to find a bottom here fairly soon. We certainly do not want to see the funds completely on the short side of gold since their selling could then push the market considerably lower. I do not expect that to happen but then again I did not expect gold to break under $380 either.
Open interest has increased some 8,300 contracts since last Tuesday’s release through this Thursday. What is significant in my opinion is that if you start at Friday of last week and take the numbers through yesterday, open interest has basically gone nowhere. It was at 253,594 last Friday and as of Thursday this week it is at 255,231; not much in the general scheme of things but significant in this regards -
New buyers and new sellers are slowly entering the arena as it appears the drain in open interest has stopped for now. This is symptomatic of a market in a range trade that is deciding which way it now wants to move. It is now attracting both fresh longs and fresh shorts to replace those who are bailing out and liquidating positions. We will need to keep a close eye on any continued build in Open Interest especially if it occurs while gold continues to move back and forth within its current range between 371 and 385. The longer it can maintain this chop without violating either downside support or upside resistance as more and more buyers and sellers join the battle, gold will be poised for a significant move in one direction or the other as a great deal of pent up energy will be released. Either the shorts will panic if we break thru the topside resistance or the longs will throw in the towel if support near 371 is taken out. If the former, then we will see $395-$400 gold fairly quickly in my opinion. If the latter, I would prefer not to even think about that.
One side note – with the beating gold has taken of late, in Euro terms, it is now nearly the same price it was at the beginning of 2002! Another way of looking at this is that every single European investor who might have bought gold in January 2002 as a hedge against terrorism or simply in an attempt to retain value has gotten a measly 8 Euro gain per ounce as of today in his gold holdings in the last 2 ½ years. That is how thorough a job the cartel has done in clocking the yellow metal."
-Dan Norcini
(maximize your window)
Dan, What did I buy?
You ready? I'm going to shock you...as the say at the World Series of Poker..."All in..."
WHT, BGO, NG, NXG, NEM, RGLD, VGZ...heaviest in NG and BGO.
100% in now. Might even margin a little once we get started. 40% HUI haircut is about done. Not bearish anymore since all double top targets have been reached.
===============================================================
Hi ld,
Nice selection.... I own the first four on your list so I'm wishing you a double portion of the best of luck in the coming days.
Though the HUI haircut may indeed be about done, what, iyo, is the catalyst that will start the USD backsliding again?
Fwiw, I still don't feel that there can be a very spirited or lengthy rally w/o a commensurate weakening of the Dollar and I don't get the impression that the unwinding of the varied carry trade activities has come to an end.
On the other hand, Friday's gold CoT report was the friendliest set of numbers to the bullish cause that I have seen in the 30 or so months that I've been following them.
The net short "smart money" commercial trader position has dropped from 191K to 69K contracts (brown line) in the past four weeks while the net long "smart money" commerical trader position jumped more than 35K contracts in the same four week period. The % of commercial bullish posiitons has doubled from 17% to 35% since April 12th.
What may be more bullish, in my view, is that the theoretically "weak handed" small bullish speculators (yellow line) have reduced their net long positions by 21K contracts while the large speculators net longs positions (blue line) have dropped from 139K to 38K contracts in the same four week period.
Tho these 'trends' can continue for an indeterminate period, I tend to believe that we are near the bottom w/r to the PoG, but with the strong feeling that a weakening dollar is needed to complete the picture we gold buffs are longing (pun intended) to see, I'm prepared to wait it out, come rain or come shine. <vbg>
===============================================================
Some other CoT comments
From Jim Sinclair's site:
"Mo Town’s Mr. Lee” sees clearly the doers of the dirty deed when he says: “COT is the least short of gold since July of 2003. Largest speculators are the least short of gold since July of 2003. The positions held by both parties are at a point of reversal along the trend line defined at both the Up Trend line and Power Down Trend lines of the herewith faxed chart. These guys are using this decline - in all probability sponsored by them - to cover their shorts, reverse their stance and go long.
Well, let me say this Mo Town: "This game is for billions. People commit crimes for $50. What do you think is going on?"
Golden Comet “Mad Jack MyMoney,” reviewing these same figures, says: “COT has recognized the fundamentals of gold and is reversing their positions and getting long and longer. COT is joining Dr. No, Chung Phat and ABX on the buy side. How many more contracts does COT have to buy to start pushing the price of gold higher? They have increased their long position by 31,122 contracts since the price of gold dipped under $380."
From Dan Norcini @ The LeMetropole Cafe:
"Commitments of Traders this week is astonishing. A massive change is occurring in the composition of the gold market participants. As of this Tuesday, the fund category sold over 16,500 contracts, 11,578 of them being brand new shorts. The funds are now down to their smallest net long position since last July 2003 when the gold price was trading near $350. At that time the fund net long position was at 39,409. With today’s release their net short position is at 38,016. In looking back over the last year the lowest level the fund net long position reached was 21,000 or so in both April 2003 and July 2003. Both times saw that as the bottom for the gold price. We are about 17,000 contracts from that point and if the fund longs continue to liquidate at this rate and the fund shorts continue to add on at the current rate, we will be at that level within the next week or so. That should be interesting to watch to see if the pattern holds and the market then begins to move up.
Another very significant point - The commercial category DID EVERY BIT OF NET BUYING in the gold pit from May 5- May 11. That buying was to the tune of nearly 20,000 contracts. That is huge and I mean HUGE. They too are now down to the smallest net short position they have had since July 2003. The kind of buying now taking place is quality buying by jewelry and refining interests and such not to mention mining outfits who are eliminating hedges. The reason I state this is because the COMMERCIAL LONG category is now carrying the largest long position (83,705 longs) they have had in over a year and a half. As a matter of fact, the last time they were anywhere near this loaded on the long side was back in March 2003 when they were carrying a bit over 73,500 longs. That was two weeks before gold bottomed near 319 and then went directly to 372.
From where I am currently sitting, gold is coming to an important crossroads. If the composition continues to change the way it has been doing for some time now with the funds moving off the long end to the short side and big commercial interests either covering shorts or going long, gold needs to find a bottom here fairly soon. We certainly do not want to see the funds completely on the short side of gold since their selling could then push the market considerably lower. I do not expect that to happen but then again I did not expect gold to break under $380 either.
Open interest has increased some 8,300 contracts since last Tuesday’s release through this Thursday. What is significant in my opinion is that if you start at Friday of last week and take the numbers through yesterday, open interest has basically gone nowhere. It was at 253,594 last Friday and as of Thursday this week it is at 255,231; not much in the general scheme of things but significant in this regards -
New buyers and new sellers are slowly entering the arena as it appears the drain in open interest has stopped for now. This is symptomatic of a market in a range trade that is deciding which way it now wants to move. It is now attracting both fresh longs and fresh shorts to replace those who are bailing out and liquidating positions. We will need to keep a close eye on any continued build in Open Interest especially if it occurs while gold continues to move back and forth within its current range between 371 and 385. The longer it can maintain this chop without violating either downside support or upside resistance as more and more buyers and sellers join the battle, gold will be poised for a significant move in one direction or the other as a great deal of pent up energy will be released. Either the shorts will panic if we break thru the topside resistance or the longs will throw in the towel if support near 371 is taken out. If the former, then we will see $395-$400 gold fairly quickly in my opinion. If the latter, I would prefer not to even think about that.
One side note – with the beating gold has taken of late, in Euro terms, it is now nearly the same price it was at the beginning of 2002! Another way of looking at this is that every single European investor who might have bought gold in January 2002 as a hedge against terrorism or simply in an attempt to retain value has gotten a measly 8 Euro gain per ounce as of today in his gold holdings in the last 2 ½ years. That is how thorough a job the cartel has done in clocking the yellow metal."
-Dan Norcini
Dan 
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