July 17, 2017 CHARTWORKS - Technical observations of Ross Clark “Gold Constructive”
The COT Numbers for Gold and Silver are Constructive
We monitor the Commitment of Traders in search of extremes. In the last few weeks the
commercials have established the largest net-long positions in gold and silver since the December
2015 bottoms. Non-commercials have the smallest net-long positions in that time frame.
Absolute levels are of some significance. However, it is the way the COT numbers move that is
of even greater importance. In the case of gold and silver we are seeing optimum setups for upside
price action. When the positions of commercials and non-commercials (speculators) reach the
outer Bollinger Bands and the RSI’s reach overbought/oversold readings it means that there has
been an urgency on the part of players to establish positions. Such conviction is a great means of
measuring sentiment in the speculative group. Any upside reversal in price or change in
fundamental outlook can now be fueled by speculators who are currently sitting on the sidelines.
This negative sentiment relates well with the February through May 1986 period we have compared with
the current eight-year cycle. In the case of 1986, the non-commercials were net-short most weeks until the
breakout in August. Commercials were net-long.
