RE: loosechainge - Thanks ! Was searching for a chart to visualize what I was talking about.
https://www.moneyweek.com/news-and-charts/economic-indicators/gold-indicators/10-gold-cot-00010
The commercials usually get it right. They are the members that are in the industry. they know there product and market better then anyone so you would think they should get it right more then wrong. it s interesting to watch the cot report because it does visualize what they are doing as a group. They generally sell into rallies and buy on the selloffs.They nearly always remain net short as they do have a purpose to forward sell mine production.
The none commercials are the traders both large and small and reported as those two groups of large and small. they tend to get it wrong just about all the time. They buy high and sell low. this time seems to be pretty extreme on there habits as they have sold short to absolute record levels. all that happening in the last few reports. Of course with them pounding the sell button the price should have dropped you would think. They have sold to the commercials whom were real short and now have gotten to what I think would be a long position if you could back out the true mine forward sales.
My take is that the jewellers and some bullion dealers and the commercials that are hedging there future inputs see prices about to explode and want to cover all open shorts and be long.
What i think could transpire regards the march contract which is a full triple witch. If the commercials add 10 long june contracts and short 10 march contracts the cot report would show no change in net postion. If the march expires and is not rolled they could then be long the 10 june contracts under the cover of the expiry month. Really wish the cot report gave a little further detail on the avg month holdings on the contracts.
This group also can get to positons as high as 500,000 contracts short of 100 ounces per contract. They have the deepest pockets. If the speculators do need to cover enmasse usually the commercials would be there to sell it to them at the right price. The fact that the speculators are that short begs the question will they (the commercials) sell it at the right price or let them blow the top off this thing. Real extremes are present readings. Usually these extremes mark bottoms and tops at the other extreme. I think a major short covering rally gets this next leg going on a big move.
Smart big money first and quiet then it starts to move.
LC