4 replies to this topic

[TomD]

Just as I find myself getting neutral on gold...indeed equities in general....I look at the above....

96% bullish?....I believe tha ratio of long to short for large specs is at an all time high.

[SilentOne]

Hi Tom, So if the commercials are typically short, who is that long? I would guess the hedge funds at this point. I find that number incredible too and cannot offer any other explanation. Surely most investors are not long here having seen the route after the March spike. Someone big has to be in there and it must be a very calculated bet IMO. It will be very interesting to see what next month holds. I am very bullish BTW, despite the high sentiment readings in the PM sector. cheers, john

[SilentOne]

I had a closer look. As usual, commercials are heavily short against an aggressive long position by large specs. And the smaller spec traders are also heavily long silver. Picture looks the same for both futures, and futures/options combined.

But note one thing. The large specs are enourmously long silver against large spec shorts. Not too many bears in that camp. Someone is in there with a big bet.

COT Silver Report - August 27, 2004

Have a look at how commercials are very short gold against a very long position by small specs. The fact that they could not take gold down heavily Friday is very interesting.

COT Gold Report - August 27, 2004

BTW - Just as an aside, with everything that you know, do you really ever expect to see commercials heavily long either metal? To my memory it hasn't happened since 2001. I wonder if we are ever going to see a short squeeze in this sector to liven things up.

cheers,

john

[TomD]

My reading of the tea leaves has me looking at the Gold COT in much more neutral terms....there is certainly lots of room..."either way"....my thinking right now it depends on how the USD handles the 90 level I was actually turning much more neutral on gold...I thought gold stocks put in a good performance in a difficult envrionemt a bullish divergence silver I just cannot be bullish on...the chart pattern sucks...there are technical divergences.....and of course there is that ratio.....it seems to me the only way it can go up is if these guys just add to thier own postions to try to get more of the small specs to come in to play....absolute levels of open interest is not that high an rising...but it does not fit my buy criteria 6.5 and moving average support must hold or I think it is in for another dunking... ANY time that commericials are actaully net long is a time to really buy with both hands. and then just go away.....is almost like oil under $15....I think it would take a real deflation scare or a USD rise to 100+ to see that again.

[SilentOne]

Hi Tom,

I agree with not betting against the commercials say in the S&Ps or QQQ. In fact, if you have been unsure on market direction, a review of their position is always a good sanity check.

But they have been holding the short side for how long now? They are short a chart that looks like this??

http://bigcharts.mar...&mocktick=1.gif

Come on. What is that about??

Then of course Merlin is not particularly optimistic on next week.



cheers,

john