A Caution Sign for Gold By Jeff Clark, Editor, Market Minute If you turn on the television, you’ll find the talking heads are almost universally bullish on gold. Anytime the subject of gold or gold stocks comes up on CNBC, Bloomberg, or Fox Business, the analysts conclude gold is going higher. But for me, that’s a caution sign. Because that universal bullishness often occurs closer to a top than to a bottom. It is also quite hard to find many negative comments on gold posted on X. Yes, there are some folks who lean bearish. But, their number is dwarfed by the army of gold bulls. Here again, this is something that happens near a peak in the gold market. | Recommended Link | | | | This one stock has been responsible for gains of 85% in 14 days, 176% in 5 weeks, 41% in two weeks, 120% in 3 months, 138% in 8 days, 186% in 8 days, 222% in 8 days, and many more… Now, millionaire trader Jeff Clark is revealing his strategy for trading this stock PLUS the full name and ticker symbol for FREE. Simply click here right now to watch. |  |
The “Dumb” Money Gold speculators, also known as the “dumb money,” have amassed their largest net-long position in gold futures since the metal reached a short-term peak in October. So, like I said, just about everybody is bullish on gold right now, except for one group – the smart money. Commercial traders are the “smart money” for gold. They’re the merchants, miners, explorers, and bankers in the gold sector. They use futures contracts to hedge their exposure to the precious metal and protect themselves against adverse downside moves. For example, if a major gold producer wants to lock in a guaranteed price on its gold production, then it’ll short gold in the futures market – thereby hedging its bet. Each week, the CFTC Commitment of Traders (COT) report shows the positions (long and short) of the largest commercial gold traders. The short position in gold is almost always a positive number – meaning that commercial traders are usually short gold futures contracts. That makes sense since most commercial short positions are hedges against a future decline in price. When gold is at a relatively low level and commercial traders expect it to be higher in the near future, the COT short interest often drops to less than 200,000 contracts. The CFTC report published last Friday – which reports positions as of January 14 – showed the smart money is net-short over 302,000 gold contracts. Here again, this is a condition that often occurs closer to a top in the gold market than to a bottom. In for a Short-Term Drop Historically, when the commercial traders’ net-short position gets this high, the price of gold tends to suffer in the short term. That doesn’t mean investors should sell their gold or that traders should build up short positions. The long-term outlook for gold remains bullish. But, folks should be careful about chasing the price of gold higher in the current environment. We’ll likely have a chance to buy it a bit cheaper several weeks from now. Best regards and good trading, 
Jeff Clark
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