There are two main indexes tracked by commodity tracker funds: The S&P-Goldman Sachs Commodities Index and the Dow Jones UBS Commodities Index. Assessing the likely impact of these passive longs on Comex throws a new light on the record level of Managed Money short positions.
After more than a decade of perpetual strength, gold suffered its worst losses since the early 1980s. Many investors have eschewed the metal in favor of stronger markets; however, this has helped to return this long-term bull market to health.
With Janet Yellen confirmed as the new Fed chairman, gold is now focused on the different economic trajectories of the various major economies. The U.S. is strengthening while the U.K. is trying to cool off its hot housing market.
Conditions look set for the U.S. dollar to rally next year with the U.S. economy showing some real vigor and the U.S. Federal Reserve starting the process of tapering its quantitative easing program beginning in January.
The future price of gold cannot be discussed without considering its implied discount rate expressed through time-preference. This is the relative desire to own goods at an earlier date rather than later.
Gold, heading for the biggest slump in three decades, reached the lowest price since June as an improving economy cut demand for wealth protection. Silver prices touched the lowest in more than four months.
With gold set to post negative year-over-year returns for the first time in 13 years, many traders are positioning themselves for an uncertain 2014. Amidst such volatility a trader must be very conscious of risk, and options are a vehicle to do that.