The latest commitment of traders report (COT report) showed that the hedge funds on the Comex (the “managed money” account) is now net short 33.9k contract of paper gold. This is a record net short position in paper gold for the managed money account on the Comex. The previous all-time high was 27.2k contracts at the end of December 2015.
This explains a lot to me about the character of the price decline in gold since early April. Just like in the stock market, the large macro “quant” funds use computer algorithms to momentum trade Comex futures. It’s this factor that caused the price of gold to drop quickly once it went below its 50 dma on April 12th. The shift to a net short positioned reflects hedge fund computers unloading long positions and piling into the short side.
At some point this dynamic will go the other way and, at the very least, there will be a significant short-covering rally as the hedge fund positioning swings back the other way. This will really get interesting if the hedge fund algo move to cover shorts on the Comex at the same time the stock market heads south again. This would stimulate a hedge fund algo party that could finally send gold over $1400.
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Gold COT Report - Futures & Options Combined | |||||||
Large Speculators | Commercial | Total | |||||
Long | Short | Spreading | Long | Short | Long | Short | |
166,966 | 130,944 | 202,515 | 247,968 | 305,729 | 617,450 | 639,189 | |
Change from Prior Reporting Period | |||||||
-10,315 | 9,379 | 4,570 | 9,256 | -13,397 | 3,511 | 552 | |
Traders | |||||||
205 | 107 | 153 | 63 | 58 | 335 | 251 | |
Small Speculators | |||||||
Long | Short | Open Interest | |||||
55,707 | 33,968 | 673,157 | |||||
-4,363 | -1,404 | -852 | |||||
non reportable positions | Change from the previous reporting period | ||||||
COT Gold Report - Positions as of | Tuesday, April 23, 2019 | ||||||
Roka
It seems my last chart was was pretty well on the money and bounced off that 1270 Support line.
If the report I have posted above is correct we may see a breakout past the 1295 resistance line right up to $1400
If that is the case we can expect some large rises in all Gold stocks. I personally am down a lot in SBM with that last 30% drop but have been buying on the dips so my average isn't as bad as it was. This could be the catalyst to bring that one all the way back up. RMS has counteracted that loss and with a good report coming out hopefully in the coming week, could see this hit recent highs.
5riven
The report was sourced from here
http://investmentresearchdynamics.com/hedge-funds-record-net-short-paper-gold/amp/
