Here’s a pair of Tweets from a person I follow and respect.
Note that COT reports come out on Friday for the following Tuesday. All of the dates in the following table I created are from Tuesday. The price of gold is the closing price on Tuesday. The latest COT report is as of Tuesday, June 19.
Gold Price Vs Cot Positions
There was a huge increase in the number of large spec shorts as Hickey notes. There was also a big increase from May 8 to May 15. On both occasions the price of gold sank.
However, there was a big decrease in shorts from May 1 to May 8, with the price of gold going nowhere. Also, there was a huge increase in net long positions from June 5 to June 12 and the price of gold fell a bit.
Conclusion: COT analysis alone cannot fully explain large movement (or non-movement) in the price of gold.
I do agree with Hickey that the shorts will add fuel once long accumulation starts.
Mike “Mish” Shedlock
Are you being sarcastic or unfamiliar with supply vs. demand?
Mish – Sure by definition there is always a buyer for every seller. But, to the extent that there may be many more sellers, that may very well be true if one stipulates that many of the sell orders are just not getting filled.
Re Putin buying, don’t disagree at all. Nor, China et al. And, I neglected to mention that Brady also relies heavily on COT reports as well as open interest. Of course, those shorts will have to be covered eventually, but that presumably can be done here and there when volume is heavy.
“Isn’t that just a function of there being more sellers than buyers?” That is IMPOSSIBLE.
If someone like David Brady is aware of when banks are driving down gold then you can bet Putin will be back in the market to buy more physical to add to the 2000 tonnes he’s been buying on the dips.
There is an interesting post now on Zero Hedge/Sprott, by David Brady, re the drop in the price of gold every time it rallies to its 200 day MA since 5/24 being mostly a function of banks slamming it down with massive shorts. Anyone else seen this? Any comments? How about you, Mish? Comments?
The Specs by reputation are always on the wrong side. So if the producers are hedging higher prices it begs the question when does that happen? My own OP is that the stock market bulls are nervous and they want to hedge their bets, and of course when that happens they will close their positions in gold to square their other accounts and whoosh, down she goes, all markets in tandem. Bad news good news is we aren’t anywhere near support for the gold price. The stock bulls are waiting to buy the dip, and thats another case against gold, There are a couple scenarios in which gold might do well, a 70’s redux scenario but that pivots on a drop in federal government spending, and try to imagine that. Rates go higher, gold goes higher, could happen.
The real question is why the 47% increase? Smart money or dumb money?
Stockcharts.com shows GLD with as just having made a death cross and UUP with a golden cross as of the end of May.
Isn’t that just a function of there being more sellers than buyers?
When people buy, price doesn’t rise. When people sell, price falls.