We all saw a lot of commentary and "analysis"
over the weekend regarding the latest Commitment of Traders report.
Again, these numbers are most important when considered through the lens
of historical perspective and that's what we attempt to show you today.
It's going to be a long and busy week. From
Fedlines to Durable Goods to GDP...there's a lot going on. And Lord
knows what lies ahead politically and geo-politically! Here's just a
brief summary:
The metals have begun the week just slightly to
the upside and this is nice. More on this later today and as we go
through the week, of course.
However, for today I'd like to simply
concentrate on the two charts below. Again, the only real value in
analyzing the CoT reports is in being able to reference the current
positioning versus historical data and price. For me, the best way to do
this is to simply lay some data onto a weekly price chart.
Let's start with Comex Digital Gold. If you listened to last Friday's podcast, then you know that:
- At 157,094 contracts, the Large Spec GROSS short position is the largest seen since the survey taken July 28, 2015
- At 153,064 contracts, the Gold Commercial GROSS long position is the largest since December 1, 2015
- At 73,635 contracts, the Gold Commercial NET short position is the smallest since January 26, 2016
But how does this all appear on the chart? Are
these levels historically significant? Please take the time to expand
(and perhaps print) this chart. Take a good, long look and decide for
yourself.
Now that's all very interesting. However, where
the historical perspective really jumps out at you is when you consider
the chart/data combo for Comex Digital Silver. Again, as of the report
released last Friday and surveyed last Tuesday:
- At 81,400 contracts, the Large Spec GROSS short position is the
largest ever reported. In fact, the size of this position is now 27%
greater than the previous all-time high of 63,993 seen on July 7, 2015
- At 66,398 contracts, the Silver Commercial GROSS long position is the largest since August 25, 2015
- At 88,312 contracts, the Silver Commercial GROSS short position is the smallest seen since January 19, 2016
- At 21,914 contracts, the Silver Commercial NET short position is the smallest since September 15, 2015
As in CDG, if we plot some data and price
together, the result looks like this. Again, please take some time to
give this chart your full consideration.
So what does this mean? Well it certainly
appears that chances are high we see some significant rallies from here.
As important technical indicators such as moving averages get bullishly
crossed, these massive Large Spec short positions are ripe for a
squeeze. Shorts get covered (that's one buy) and then a long may be
established, too (that's a second buy). All of this buying pressure will
drive prices higher in the weeks ahead and this coincidentally falls
right into line with our forecast of a failing 2017 narrative (GAN2017)
and 2017 metal price highs in Q4.
Have a great day!
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Our Ask The Expert interviewer Craig Hemke began his career in financial services in 1990 but retired in 2008 to focus on family and entrepreneurial opportunities. Since 2010, he has been the editor and publisher of the TF Metals Report found at TFMetalsReport.com, an online community for precious metal investors.
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The views and opinions expressed in this material are those of the author as of the publication date, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.
