RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:one good thing goodday
There are various ways and time frames to interpret the COT data.
But, here is the main theme for a trader to pay attention to.
Gold and silver as traded on the Comex represent very large bets on the future price direction of the metals.
Human psychology is a huge factor in every market and that includes stocks, bonds, currencies, and commodities.
If you want to be an effective trader you must learn how to read this factor of psychology which includes emotions.
The COT data, in every commodity, reflects this emotional state.
When investors and speculators are fearful and bearish, they reduce their long bets and this shows up in the COT data as diminishing long positions by Speculators.
When Specs are confident and bullish, they increase their long bets.
Unlike the stock market, futures trading is a zero sum game.
This means that every contract traded has a trader who is long and a trader who is short.
It is impossible to have naked shorts because every contract must have a trader on each side of the contract.
When Speculators sell, someone has to buy and this has to be another Spec or a Commercial trader.
When Speculators buy, someone has to be short and that can be another Spec, but usually is a Commercial trader.
So when Speculators dramatically increase their long bets, Commercial traders increase their shorts, since this is a zero sum game.
When Specs are increasing their longs it puts upward pressure on the POG.
When Specs reduce their longs, it puts downward pressure on price.
Price bottoms, in any commodity, usually occur when Specs have a very small number of longs and tops tend to occur when Specs have a very large number of longs.
The recent surge in Spec longs and corresponding spike in Commercial shorts suggest that there is a good chance that price has moved too far, too fast and a short term sell-off or consolidation is likely.
I like Maunde's work, but I think he is too bearish here.
I think that there is strong evidence that an intermediate bottom is in place.
A short term shakeout of about $50 in gold, peak to trough, and maybe $1.25 in silver is the worst that I expect.
Here is another essay that I also like which addresses the COT data and supports the notion that an intermediate bottom is in.
https://thedailygold.com/gold-cot-analysis/
I follow Jordan's work and recommend his free newsletter.
The point that he is making and I agree with him, is that Spec positions have not reached a long term extreme and intermediate price highs in markets tend to occur when Spec buying reaches extremes.
In other words, after a major price low, as we appear to have made in gold, the Specs will be right, in general, about increasing their longs and their buying is part of the fuel for the new bull move.
The Specs will be most wrong at the price high and the Commercials will have large net short positions as the other side of the trades.
So at price extremes, the Specs will be wrong and the Commercials will be right about price direction.
If you want to turn a small amount of money into a large amount, I think that it is important to develop trading skills.
Buy and hold usually won't accomplish the goal, because a small time trader has to take advantage of the cyclical swings, in my opinion.
Its OK to have small buy and hold positions, but to really max out a bull market it is important to develop some trading skills.
If you have a good bull market you don't have to be a great trader.
Mostly you need good tactics and good money management.
A trader needs some skills in fundamental and technical analysis.
Here is a link to a guy who posts Fridays at 321gold.com.
Hubbartt does excellent TA including good volume analysis, which is overlooked by many TA writers.
https://www.321gold.com/editorials/sfs/hubbartt070414.html
I always watch his presentations and usually learn something important.
I strongly recommend that you check him out if you want to be a better trader.
goldguy.