Our Speculative Position Review On Gold, Silver, Platinum And Palladium

July 16, 2018

Summary

  • Gold speculators increased both long and short positions on the week with minimal positional change.

  • Gold producers & merchants cut both long and short positions which suggests gold is being driven by speculators and true physical market activity is low.

  • In silver speculators on both the long and short side cut positions.

  • Platinum interest has been rising as the short position has soared.

  • The palladium market remains relatively slow and steady.

The latest Commitment of Traders (COT) report, showed gold speculators increased both their long and short positions by minimal amounts for the week. In contrast, Commercial gold entities cut both their long and short positions on the week. This suggests that currently the gold trade is being driven by speculative interest and less so by actual market interest. In silver, action was negligible as commercial did essentially nothing while speculative players both cut positions.

In addition to gold and silver, this week we will briefly cover the COT positions in platinum and palladium as its seems there has been much more interest in these metals – probably due to the volatility shown and the decade low price seen in platinum.

We will get more into some of these details but before that let us give investors a quick overview into the COT report for those who are not familiar with it.

About the COT Report

The COT report is issued by the CFTC every Friday, to provide market participants a breakdown of each Tuesday's open interest for markets in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC. In plain English, this is a report that shows what positions major traders are taking in a number of financial and commodity markets.

Though there is never one report or tool that can give you certainty about where prices are headed in the future, the COT report does allow the small investors a way to see what larger traders are doing and to possibly position their positions accordingly. For example, if there is a large managed money short interest in gold, that is often an indicator that a rally may be coming because the market is overly pessimistic and saturated with shorts - so you may want to take a long position.

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Gold is the world’s oldest and most known currency.