goldsilverworlds.com / By Gold Silver Worlds / March 12, 2013
It became a tradition recently – our weekly review of the positions of the large traders in gold and silver basedd on the weekly Commitment of Traders Report. Why do we spend time and effort on this matter? Because it is the epicentre of the short term price setting. Compare it with the stock market; like it or not, as soon as the big money takes a position, prices follow in the same direction. Read our Crash Course In Short Term Gold & Silver Price Forecasting to gain insights in the basics.
The most noteworthy chart of the latest Commitment of Traders Report, is the one that shows the difference between the speculative longs and the shorts, while at the same time comparing it with the total open interest (all short and long positions together, including the speculative AND the commercial participants).
As we explained in our “Crash Course“, as soon as this indicator falls below the line at 19%, it flashes a bullish signal.
As Adam Hamilton from Zeal Research noted in his latest article, excessively high short positions by speculative participants are the most bullish signal from a contrarian point of view. The short positions of small speculators have not been this high since 1999. The next chart shows how the long vs short positions of speculators are comparable with the readings during the 2008 crash.