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Gold: Bank Analysts Vs COT Traders

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Published : November 28th, 2023
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Category : Gold and Silver

It’s said that there’s no fever like gold fever.

Big bank analysts definitely have a very positive outlook on the world’s greatest metal but…

Is their outlook valid?

In the long-term, it certainly is. The economic rise of the huge numbers of gold-oriented citizens in China and India… this alone is enough to produce relentlessly rising gold, for the next 100 to 200 years! 

Unfortunately, it appears that the smart money big bank commercial traders have a somewhat different take on the short/medium term outlook for gold.

The commercial traders have been aggressively shorting the gold and silver markets into the rally, and if there’s further strength in the price, they will likely continue to do so.

Investor tactics? 

Double-click to enlarge this weekly gold chart. While I don’t think any gold bug needs to be concerned by the commercial trader action, this certainly isn’t a buy zone.

Amateur gold bugs tend to base their buys on price projections while professionals base theirs on significant price weakness.  

Sometimes the amateurs get it right, but more often not. In contrast, the commercial traders almost always see the price decline not long after their sell program is complete.

Likewise, their buy programs (like the latest one into $1825) tend to be followed by significant price appreciation.

Commercial traders would almost certainly be buyers at $1925. That’s the number I suggest gold bugs focus on for any new buys… while cheering for gold to go to the $2080 highs before there’s any significant dip in the price.  

How likely is a move to $2080? For some insight into this issue,

Double-click to enlarge. There’s inverse H&S action all over this daily gold chart, and it’s in sync with some big Indian jewellers calling for $2200 by January or February. Clearly, $2080 is highly likely to happen soon.

What about silver? Well, as noted, there’s no fever like gold fever… with the possible exception being silver!

Double-click to enlarge this daily silver chart. The bull pennant suggests silver could “overshoot” the upper channel resistance line…

But whether that happens or not, silver bugs who bought basis my $1825 gold futures early October buy zone are looking great and are in the driver’s seat now.

What about new metal “bugs”, should they get involved with silver? I always suggest that investors should have an emotional connection with investments rather than just an outperformance dream.

If there’s no love for silver, focus on gold.

The miners? This is where the action could be for a long time, and in a very good way. 

Double-click to enlarge this long-term CDNX chart. The amber and green markers are where my 24/180 moving average crossovers occur. The next signal will be a buy and the huge inverse H&S pattern that’s being completed now suggests the move could be a true “barnburner”.

Double-click to enlarge. In the short-term, the CDNX chart has suddenly become very positive too. 

I write my junior resource stocks newsletter about twice a week, and at just $199/12mths it’s an investor favourite. I’m doing a special pricing this week of $169 for 14mths. Click this link or send me an email if you want the offer and I’ll get you onboard… just in time for what could be the biggest rally in 20 years!

My biggest mine stock focus is the seniors, and on that note,

Double-click to enlarge. On this weekly chart, GDX looks like a rocket sitting on an inverse H&S launchpad.

Note the head of the pattern. It occurred right at the “mighty” buy zone of gold $1825/$1810. Mine stock enthusiasts are eager to see a breakout over the $30 neckline area, and I’ll dare to suggest…

It could happen today!

For closer look at the action,

Double-click to enlarge. On this GDX daily chart, the inverse H&S action is even more impressive. Also, note the action of the Stochastics and RSI oscillators; neither is overbought. 

While Tuesdays are often a soft price day for the metals, today could provide investors with a glorious breakout above $30, putting the $33 and $36 targets into positive short-term play!

Thanks!

Cheers

St

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Stewart Thomson is a retired Merrill Lynch broker. Stewart writes the Graceland Updates daily between 4am-7am. They are sent out around 8am-9am. The newsletter is attractively priced and the format is a unique numbered point form, giving clarity of each point and saving valuable reading time.
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