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The Commitment of Traders (COT) reports is published every Friday as of the previous Tuesday. The COT report shows long and short positions.

My lead-in chart plots the price of gold as of the close of every Tuesday starting June 12.

The big specs are typically hedge funds and pension plans while the commercials are gold producers and market makers. The producers are always short, while the market makers are hedgers who take the other side of the trades.

Now let's look at changes in open interest.

Gold Open Interest Positions

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There are at least two problems with the gold short theory.

From June 26 to July 3 the price of gold rose by $5.30. Yet, the large spec shorts increased from 118,446 contracts to 132,156 contracts. The small specs increased shorts from 32,129 to 36,276 contracts. That's a total short increase of 17,857 contracts. The open interest rose by 25,591contracts (majority short).

From July 3 to July 10, the price of gold declined by $15.30 while the long position increased by 6,083 contracts and the short position decreased by 1,161 contracts. Open interest increased by 9,424 contracts (majority long).

I have seen the gold short theory posted before, but it doesn't add up. We can check again on Friday when we have the report for July 17.