“In terms of total COMEX gold open interest, this number bottomed on December 12 at 446,618 contracts. As of Tuesday this week, total OI has grown to 582,333 contracts as banks have created and fed new contracts to hungry Spec longs seeking gold exposure during this rally.
System Apologists will claim these new contracts represent new demand for hedging from the banks' mining company clients ... to which you should ask: 13,600,000 ounces worth? That's 423 metric tonnes! So you're telling me that suddenly over the past six weeks, the mining companies have decided to hedge 423 metric tonnes of future production?
That's preposterous … but that's what The Apologists will claim.
At 582,333 contracts, total COMEX gold OI is now at the highest level seen since September of 2016. It’s also within shouting distance of the ALLTIME HIGH of 657,776 seen on July 11, 2016. This fact alone should give you pause to consider that price is near a short-term top.
Then, consider the latest Commitment of Traders structure. Where these reports were positive and bullish back in mid-December, they are now increasingly bearish and negative. The next report this Friday will likely show a Large Spec net long position of 240,000 contracts or more, versus a "Commercial" net short position of nearly 260,000 contracts. Compare this to the most recent data below”
