‘Smart Money’ Most Bullish on Gold in Five Years

SOURCE:[The Globe and Mail] – Commercial participants in the gold market, also known as “smart money” given that they work in the industry as opposed to being speculative trend followers, are the most bullish on gold in nearly five years.

As prices declined over the last few months, commercials – those involved in the production, processing or merchandising of a commodity – have been busy buying futures contracts and covering short positions, according to data from the Commodity Futures Trading Commission.

Large traders, mostly made up of hedge funds that are often trend followers, are currently net long 83,726 contracts – the most bearish reading since the October 2008 bottom. The group tends to be the most bearish at market bottoms and the most bullish at market tops, suggests Euro Pacific Canada analyst Dima Kash.

The third group, small traders, are those that control a very small portion of open interest in futures contracts, but their actions tend to help gauge retail sentiment nonetheless. Historically, they have been on the wrong side of the gold market at key inflection points, according to Mr. Kash. The group this month had a net short position of 1,704 contracts, an extremely bearish reading not seen since February 2001 when the gold market was about to begin its decade-long bull-market run.

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‘Smart Money’ Most Bullish on Gold in Five Years

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