Gold Monthly Chart 2004-Present

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Gold Monthly Chart 2010-Present

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Smart Money Shorts

I ignore short-term COT "smart money" warnings although I would prefer there to be fewer bulls.

For discussion of "smart money", please see Investigating Alleged Smart Money Positions in Gold.

Pater Tenebrarum at the Acting Man blog pinged me with this idea: The only caveat remains the large net speculative long position, but at the moment this strikes me almost as a "bear hook" that is keeping people on the sidelines waiting for the "inevitable" pullback while the train is leaving the station.

With the 6-year consolidation over, there is every reason fundamentally and technically for gold to continue up.

So, be my guest if you want to time gold to COT positions.

Technically Speaking

Technically, there is short-term monthly resistance between here and $1566. Perhaps there's a pullback now, but with technical and fundamentals otherwise aligned why bet on it?

The next technical resistance area is the $1700 to $1800 area so any move above $1566 is likely to be a fast, strong one, perhaps with a retest of the $1566 area from above that.

Gold Fundamentals

Gold fundamentals are in excellent shape as I noted in How Does Gold React to Interest Rate Policy?

Much of the alleged "fundamentals" are noise, not fundamental price factors.

Not Fundamentally Important

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Aso, gold does not follow the dollar except superficially and in short-term time frames.

Gold vs the Dollar

Many people believe gold reacts primarily to changes in the US dollar.

Last week, I rebutted than notion in Gold's vs the US Dollar: Correlation Is Not What Most Think.

True Supply of Gold and Reservation Demand

It is important to note that nearly every ounce of gold ever mined is still in existence. A small fraction of that mined gold has been lost, and other small fractions sit in priceless statues in museums etc., and is thus not available for sale.

Otherwise, someone has to hold every ounce of gold ever mined, 100% of the time. That is the true supply. Jewelry buying and mine output are insignificant in comparison. We are not about to run out of gold as some gold shills suggest.

Mises refers to the desire to hold gold as "Reservation Demand", that is the desire of people to hold their gold coins, bullion, bars, and jewelry rather than trading it for something else.

If we strike out jewelry buying, central bank buying, the dollar, and mine supply, what then determines "Reservation Demand" to own gold vs some other asset?

Faith in Central Banks

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Talk of normalization was nonsense, as were various "Dot Plots" that suggested the Fed was on a major hiking cycle.

For an amusing chart of where the Fed projected interest rates would be in 2020, please see Dot Plot Fantasyland Projections.

The market did not believe the Fed, neither did I, and neither did gold.

Once again we are back to my central gold theme question.

Is everything under control or not?

Mike "Mish" Shedlock

How are Gold and Money Supply Related?

M1 and M2 Money Supply numbers are surging. Will gold follow?

Misunderstanding “Peak Gold”; Gold About to Run Out?

Is gold about to “run out”? The correct answer to that question is the likelihood of that happening is precisely 0%.

Gold at Record High in Euros, Watch the Yen!

Gold is in a major breakout in the Euro and on the cusp in the Yen. Can the US dollar price be far behind?

Gold's Brick Wall

For the past four years, every time gold hit the 1350-1370 level or so, it is turned down sharply.

How Does Gold React to Interest Rate Policy?

From 1970 to present let's investigate how gold reacted to various interest rate environments.

Peak Gold? No: Peak Gold Production? Perhaps

Some claim we have reached peak gold. It depends on what one means by the term. Perhaps we have reached peak production.

Eight-Year Positive Cycle for Gold Starting Now

McClellan Financial says an eight-year cycle for gold is about to start and the next five years will likely be good ones

Gold's New Breakout is Very Bullish: Here's Why

Gold hit a new high for the move to $1714 and a new closing high of $1707. Additional charts explain the significance.

Gold is Not a Function of the US Dollar Nor is Gold an Inflation Hedge

Swings in the US dollar have no long-term impact in the price of gold. Nor is gold an inflation hedge.