Saturday, November 19, 2016

Gold Market - Update

Selling pressure in gold continues. For example, GLD investors are still decreasing their long positions in gold:

Last week GLD was reporting reductions in gold holdings each trading day. Let me list these gold outflows:

November 14:   181 thousand ounces
November 15:    48 thousand ounces
November 16:    38 thousand ounces
November 17:   181 thousand ounces
November 18:   172 thousand ounces

As the chart above shows, the old pattern of holding the unchanged amount of gold in GLD despite lower prices of gold, was violated last week.

Simply put, American investors are not perceiving lower prices of gold as a buying opportunity . Quite contrary, it looks like they are panicking.

The same pattern is delivered by the COT report - speculators are selling gold. I was curious about speculators after the election week. Here is the answer - they decreased their long position in gold futures by 40 thousand contracts:

However, note that each time the selling pressure, demonstrated by speculators, reached its climax the prices of gold were bouncing up next week - look at the circles plotted on the green bars (big reductions in net positions held by speculators) and the accompanying circles plotted on the price chart (bottoms in gold prices).

Summarizing - the selling pressure in gold is still intact but the next week may be positive for gold bugs. I would say that the next two weeks (the next week is very short due to Thanksgiving Day) will be very important for gold bugs. Look at another chart:

As the chart shows, the prices of GDX were relatively stable last week (they even went slightly up). Note that both gold and silver prices went down last week. In other words, precious metals stock prices were not following gold and silver last week, which may be indicative of the dissipating selling pressure in the gold sector.

Looking at both charts (GDX and COT Report) I think that the incoming two weeks should clarify the whole picture.

Last but not least. The US dollar.  

The chart shows that something strange is happening here. The speculators are reducing their long positions held in US dollar futures. Look at the green bars - last two weeks these bars were negative, which means that speculators were decreasing their net long positions. It looks like they are starting to bet that the bull market in the US dollar has ended. It is a chance for gold bugs.


  1. Non capisco perche ci sono 30$ di differenza tra Shanghai e Comex.
    Shanghai non ha comprato 20.000 contratti questa mattina.

  2. Isnt the risk here that US dollar will continue to run?

    Investors are exiting Treasuries and Bonds (having reached their peak values). This reduction in this trillions-of-dollars market is spilling over into dollar Equities - DXY will keep climbing, and be paired by a declining Au price.

    Gold in emerging market terms will continue skyrocket (due to their declining currencies) but not US dollar terms.

    Gold is trading in no-mans-land until it fully bottoms; and equities will absorb the speculators