COT Synopsis: As of Tuesday, 8/16, the current combined large commercial net short position (LCNS) stood at 193,366 contracts! This is the highest net short position by the LC’s since April 5, 2004, which was just before the April 2004 plunge in gold.
Outlook Snapshot: August 19, 2005. (Bearish). Again, caution flags are flying. Given the very high LCNS for gold, and the abrupt winding down of the huge Dollar Index short positions, it is apparent that the largest traders in the paper gold markets have positioned for a good deal more than just the $8.73 move lower in gold since the Tuesday, 8/16 COT cutoff peak of $446.32. Until we can see the next COT report, the odds strongly favor further weakening in the metal absent any exogenous natural or geopolitical shocks to the system.
