Speculators Throw in the Towel on Gold

Long Liquidation: Large specs reduced long gold bets and increased short gold bets. Small specs increased longs & shorts

The above chart is from 321Gold. It matches the CTFC Report.

Jump in Shorts

Last Week = (101,695 + 41,554) minus the jump (13,396 + 11,449) = 118,404

Increase in shorts = (13,396 + 11,449) = 24,845

Percentage Increase = 24,645 / 118,404 = 20.98%

Long Liquidation

Frequently one hears comments like "commercial reduced their short positions".

While arguably accurate, it conveys the wrong idea.

Commercial traders, except for producers who do sell short, simply take the opposite side of the trade. The commercial traders are not net short, they hedge.

Thus it is a more accurate summation to call this for what it is: Long liquidation. Gold longs are increasingly unconvinced and are throwing in the towel.

Like Hickey, I believe speculators throwing in the towel and betting against gold is ultimately bullish.

Hickey notes "The shorts have to cover." It's important to note that applies to speculators, not producers or hedgers.

Mike "Mish" Shedlock

Comments
No. 1-20
KidHorn
KidHorn

I think the recent weakness is due to higher interest rates propping up USD, but this is temporary. There's a limit to how high interest rates can go before causing a recession and I think we're close to that limit.

Wagner___
Wagner___

Time for Max Keiser to start a new promo "Crash JP Morgan, Buy gold!"

Carl_R
Carl_R

This article is exactly right. The commercials simply hold the opposite position to the speculators, whatever that may be, and then hedge to eliminate risk.

truthseeker
truthseeker

niceconstable if more dollars are needed to support emerging markets, this will reduce liquidity probably causing the dollar to appreciate even more as you suggest, which will hammer the growth of our export markets.Then you suggest our banks need not worry since the FRB will provide liquidity if any problem develops.Well right now the Fed is in the process of raising rates~QT~and allowing the 4 trillion of treasury and mortgage backed securities to slowly roll off its balance sheet. So what u suggest it seems, is a complete reversal from the Feds current strategy for a move to QE~4.

hmk
hmk

Oh oh don't admit that or else you'll have the officials at your door. Oh wait Obama isn't president anymore. BTW 22 cal is supposed to be one of those rounds tradable and its cheap again now that the gun salesman of the century has left office.

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