Now looking at big money and why I see a bull posture starting, we need to look at the weekly chart. Looking back to the sell side on the Aug. 2 COT report we saw Swap Dealers adding to net shorts at -21,360 and on the Aug 30 COT report they moved to a net short position of -67,108 contracts. Producers on Aug 2. were net short -4,414 contracts and by Aug. 30 were net short -20,530 contracts. On the buy side we saw Managed Money on Aug. 2 at 52,029 contracts net long and on Aug 30 70,389 contracts net long. This increased buying and selling is what truly lies beneath gold’s move up in August. And yes Swap Dealers in gold are hedgers, not speculators.
Going back further to the Oct. 5, 2012 COT report when gold was trading near $1,800, we see Producers net short -216,256 contracts, Swap Dealers net short -53,014 contracts, and Managed Money net long 162,990 contracts. So as you can see Producers have some catching up to do and it looks like they are just starting. So for the time being Swap Dealers will be the stronger sell side of gold.
And while day to day we will see gold up and down, if we see “big money’s” bull posture continue, week to week, and month to month gold will continue to rise. Watch for a break and close over $1,420 for the next ride up. Have a prosperous trading week.
If you need help understanding how to understand how to use the NEW COT report to your benefit get instant access to my new e-book "What Lies Beneath ALL Trends". It is filled with eye opening information.Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.
Proceed to Page 3 for this week's detailed fundementals...