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Replies to post #129 on All Things Precious Metals
There is no need to mince words or beat around the bush with this update. The latest COTs for gold released yesterday showed another marked improvement so that they are now strongly and unequivocally bullish – in fact they are at their most positive since late 2001, that’s 14 years.
We are not going to waste our time trying to figure out the reason or reasons for this, but possibly this situation suggests that the Fed is not going to raise rates this month as widely expected. If they don’t, the dollar, which has wafted back to its highs on this expectation, will drop and the PM sector will rally.
Without further ado let’s look at this latest COT now, with the 1-year chart for gold stacked above it for direct comparison. What is rather remarkable about gold’s COTs in the recent past is how readings rapidly ballooned to bearish levels by early November, leading us to adopt a bearish stance and short the sector, which was the correct action, but in recent weeks Commercial short and Large Spec long positions have collapsed back rapidly towards the zero line, so that the picture has quickly switched from quite strongly bearish to strongly bullish in the space of a few weeks. We know from experience that the extremely low Commercial short position that now exists means that a sizeable and tradable rally is just around the corner, regardless of whether the long-term downtrend has ended or not, and we can therefore position ourselves accordingly.
AI
