IS THIS A GOLDEN MOMENT?
To the left is a cash Gold weekly chart. You will have to click on it to enlarge it, there is alot going on here. Below price the first pane is the commercials positions, then next below that is the small speculators gross position in number of contracts held.
There has been an overwheliming media blitz on this market and why it should go to 1500, 2500, I even heard 10,000 from Joe Battalia( he was quoting someone else ). The question is, is this the time to get heavily invested in GOLD? Who knows maybe it will reach these lofty numbers.
If you look at who has been buying this market on this recent runup, it is Small Speculators in record numbers, basically me and you. While at the same time, the Commercials ( the large players with the most money ) have been selling it. It is not shown here, but the Commercials have their largest short position ever in this market right now. They clearly are in a bearish mode. Notice what has happened each time historically when this combination has been in place, where the Speculators net long position was at the level it is now ( horizontal line in third pane ), and the commercials have been heavy sellers. The red arrows mark these instances. We have had substantial declines in this market when this combination has been present.
Anecdotally, I literally do not know of a single person other than me that thinks this is a fantastic shorting opportunity. Maybe I am the village idiot, but I am a trader, and this is a very good setup for a decline. On a shorter term basis, a few things I look at shorter term are very close to lining up for a short entry and it could happen this week. Whether or not the commercials will be big buyers on a decline, will determine whether or not I am bullish on any decline.
I do not think with this combination in place, it is a good time for someone who is contemplating a long term investment here, to commit money to this. It is clearly a time for a trader to look for a short entry. Seasonally we have also tended to decline, make a top in October, so we are close there as well.
I have commented that this is now a bubble, now you can see why I think this graphically. The small money is driving this last move not the big.