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COT for Gold and Silver Enters Dangerous Territory

Technical observations of RossClark@shaw.ca

The Commitment of Traders readings for both gold and silver are at levels that have made prices vulnerable over the last four years. Commercials in silver have the largest net short position since an important top in 2008.

Gold COT Chart

Speculative non-commercial long positions are the greatest since 2005. We view the rate of change as significant as the absolute levels of the data. At the present time the RSI of both commercials and non-commercials in both gold and silver have reached the 63/37 thresholds. The last time we saw this bearish configuration was at the January highs. (This is the opposite of the bullish configurations seen on July 23rd & 30th at the gold low). In addition, Silver COT data has moved outside the Bollinger Bands.

A week with a lower low ($1158 in gold and $15.60 in silver) should serve as a catalyst for a multiweek decline.

Silver COT Chart

 


The opinions in this report are solely those of the author. The information herein was obtained from various sources; however we do not guarantee its accuracy or completeness. This research report is prepared for general circulation and is circulated for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized.

Investors should note that income from such securities, if any, may fluctuate and that each security's price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Neither the information nor any opinion expressed constitutes an offer to buy or sell any securities or futures contracts. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in this report. In addition, investors in securities such as ADRs, whose values are influenced by the currency of the underlying security, effectively assume currency risk. Moreover, from time to time, members of the Institutional Advisors team may be long or short positions discussed in our publications.

 

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