Bullish Silver & Gold COT Report

There are a number of indicators precious metals analysts track to help predict where the price might go and you’d be hard pushed to find a more instructive one than the weekly Commitment of Traders (CoT) report of positions on the world’s biggest precious metals futures exchange, COMEX.

Back in December we shared a big move indicator and on queue the price rallied over $2/oz (14%) thereafter.  This occurred again on 5 March this year and coincided with a very high GSR but weaker CoT gold signals.  That only saw around $1 improvement followed by the correction we’ve watched off the strengthening USD influence since.  The GSR too is back up near 80 at 79.3 now.  

We are now again looking to be at an interesting juncture as you can see in the charts below.  In the last few weeks, and in particular last week, we saw a huge drop in the Commercials (blue bars) short position and corresponding drop in the Speculators/Managed Money long positions in both metals.

As we’ve said before the graphs speak for themselves.  At each low in those respective positions, the price has, almost without exception, rallied, and often quite strongly.  As we explained in March, this is occurring in concert with a high GSR which adds to the fuel for take-off.  March was a false start, albeit into an historically weak seasonal period and gold not showing the same strong signals.  The big question is whether this July setup, including strong gold signals this time and ahead of the stronger seasonal period portends all many expect from the confluence of these two indicators…