goldsilverworlds.com / October 31, 2015
There has been a rapid movement over the past few weeks by commercial traders of gold futures to increase their net short position as a group. That is a development which has importance for the future of gold prices.
The data for this week’s chart come from the weekly Commitment of Traders (COT) Report, published each week by the CFTC. Within that report, the CFTC breaks down futures traders into 3 groups. That agency provides a full page of wonky definitions of each category, but here are my abbreviated versions
Commercial Traders. The big money, and thus presumably the smart money. Think Goldman Sachs for stock index futures, or Archer Daniels Midland for wheat futures.
Non-Commercial Traders. The big speculators, AKA hedge funds. They usually have the opposite position from the commercials, with the exact difference between them consisting of the positions held by…
Non-Reportable Traders. The small money, and nearly always the dumb money. They are called non-reportable because the size of positions they hold is so small that the CFTC deems them not to merit reporting individually.
I report on the relevant developments in the COT Report data in every Friday’s Daily Edition. Not every week has meaningful insights for every one of the futures contracts that I follow. Generally speaking, these data are most valuable when they show an extreme reading, because extremes suggest that a move in the other direction is likely. But figuring out what an extreme reading consists of can be a bit of a trick.