• 267 days Could Crypto Overtake Traditional Investment?
  • 272 days Americans Still Quitting Jobs At Record Pace
  • 273 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 277 days Is The Dollar Too Strong?
  • 277 days Big Tech Disappoints Investors on Earnings Calls
  • 278 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 279 days China Is Quietly Trying To Distance Itself From Russia
  • 280 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 284 days Crypto Investors Won Big In 2021
  • 284 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 285 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 287 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 287 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 291 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 292 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 292 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 294 days Are NFTs About To Take Over Gaming?
  • 295 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 298 days What’s Causing Inflation In The United States?
  • 299 days Intel Joins Russian Exodus as Chip Shortage Digs In
  1. Home
  2. Markets
  3. Other

Speculators Are Finally Bailing Out Of Gold – And That's A Good Thing

All this talk of massive new infrastructure spending financed with a tsunami of freshly-minted currency should be lighting a fire under gold. That it hasn't is a testament to how out-of-whack the precious metals market had gotten during the first six months of this year.

As gold rose, the futures contract traders whose games tend to dictate near-term price action had set the metal up for a fall. Specifically, the speculators (who are always wrong at the extremes) were ridiculously long. With the suckers all-in, a big correction was needed to restore balance.

But it didn't come. Several months passed with gold treading water, leading some to wonder if the paper market tail had finally stopped wagging the physical market dog.

Now the long-overdue correction seems to have arrived. Gold is down 11% from its recent high, and the speculators are bailing. Here's the Commitment of Traders (COT) report (courtesy of GoldSeek) for the week ending Tuesday the 15th showing a 17% drop in large speculator long positions. That's a huge move for a single week. And based on the price declines of the subsequent three days, it's likely that the next report will show a similar drop.

Meanwhile the commercial traders - the guys who sucker the speculators into these unwise bets - cut their short positions by an also notable 9%.

Typically, a bottom occurs when both commercials and speculators are flat -- that is, carrying more-or-less equal long and short positions. The latest report is still a long way from that kind of balance. But another few weeks like the last one and this indicator, at least, will be screaming “buy”.

 

Back to homepage

Leave a comment

Leave a comment