Gold and Silver COT Update - Get 30,000 Coffins Ready...

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Published : March 14th, 2016
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Category : Technical Analysis

PM Sector longs have had a laugh at our expense over the past couple of weeks as gold has continued to edge higher after we called it down, but it is looking more and more like they will end up like those 4 fools in the classic Clint Eastwood Spaghetti Western, A Fistful of Dollars. Clint rides into a tiny flyblown town and the 4 fools shoot around his mule's feet. After advising the undertaker to Get 3 coffins ready, having made a slight underestimation, Clint returns and challenges the 4 fools by saying "When you apologize to my mule like I know you're going to". Needless to say they do not respond in the required manner to this demand and so Clint quickly dispatches them to the great satisfaction of the undertaker.

While the PM sector bulls have been working themselves up into a lather the Commercials have been piling up the shorts to a huge level, and since these guys are never seriously wrong, it means trouble, big trouble. If you go against them, especially at extremes, you are a fool. I have received any number of Emails in the recent past telling me that "It's different this time" and that the COTs don't matter etc, here is an example, which I have slightly edited with asterisks, because this is a family website where vulgarity is not permitted - "Same rules don't apply. Big demand no supply. Paper commercials can go fu** themselves. No one is going to sell their physical at these sh** prices." Now I don't think that I need to tell you that when primitives like this are bullish, it's time to watch out. I certainly do not believe that the Commercials are going to be outsmarted by people of this caliber.

Let's now proceed to look at the latest gold COT. We thought that it looked bearish a week ago, but Commercial short and Large Spec long positions have risen to an even bigger extreme, as the price has stalled out following a false upside breakout from a Pennant that we can see on the 1-year gold chart placed immediately beneath. This is now viewed as the perfect setup for a brutal smash, which is likely to occur very soon. While the fundamental trigger for such a drop is a matter of conjecture at this stage, one possibility is the announcement of a rate rise by the Fed next week that sends the dollar higher.

Click on chart to popup a larger clearer version.

What about silver's COT? After easing last week ahead of a sharp rally off the rising 50-day moving average, Commercial short positions are back up near to 7-year highs, and like the COT situation with gold, this means trouble.

Click on chart to popup a larger clearer version.

Meanwhile there has been a startling change in copper's COT, just as copper has reached a critical point on its charts, having just stalled out at its falling 200-day moving average. What appears to have happened here is that the Large Spec shorts suddenly lost their nerve and bailed, probably at the worst possible time as usual, enabling the Commercials to finish closing out their earlier extensive long positions for a whacking great profit. This sudden big drop in Commercial long positions makes copper look very vulnerable again here.

Click on chart to popup a larger clearer version.

Another extraordinary development of recent weeks is that while the broad US stockmarket has climbed higher and higher, its COT chart has become more and more bullish, the polar opposite of what you would expect if this was a bearmarket rally, with Commercial long positions continuing to climb as Small Specs pile the shorts on ever higher. This is a truly bizarre situation because the charts do look bearish. Since the Commercials are never seriously wrong we take this as a stern warning not to dare to short this market, and it could be an early warning that the market is going to abort, or break out above the confines of the giant Dome visible on long-term charts. While the reason or reasons for this are as ever a matter of speculation, a big one could be a torrent of funds flowing into US markets from around the world, as a flight to safety from other much more troubled parts of the world. If this is indeed a major reason, we could see both the dollar and US stockmarkets rising in tandem, which would of course take the wind out of gold's sails. However, should Commercial long and Large Spec short positions collapse as the Dome boundary on the S&P500 index is approached, we will stand ready to short it.

Click on chart to popup a larger clearer version.

Conclusion: gold and silver Commercial shorts are at "nosebleed" levels calling for a smash soon, which might be precipitated by the Fed next week. Copper, after looking bullish for weeks, suddenly looks vulnerable, with Commercials rapidly liquidating nearly all their remaining longs. The broad stockmarket COTs are ever more bullish, suggesting that the Small Specs, who have been piling on the shorts, are going to be slaughtered. Oh, and by the way, my mistake, 40,000 coffins.


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Clive Maund is a specialist of technical analysis. His website, www.clivemaund.com, is dedicated to serious investors and traders in the precious metals and energy sectors. It offers no nonsense, premium analysis to subscribers. It is 100% subscriber supported, and takes no advertising or incentives from the companies it covers. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis. Happy trading.
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Please see my earlier comments on the 2 previous articles
Looks like the only coffins needed are for you and the subscribers that followed your advice
I gave you the benefit of doubt but you were Too Cocky and now you need to eat crow

The train left the station and left you and your followers behind
As well as all your money
You deserve all the crap you get by email

Too cocky
Too cocky
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So this bod thinks he is a specialist??? a specialist at blowing his own trumpet that's what.Have a good look at his tracj record
and see for yourself just how many times he gets it utterly wrong.Read 10 articles about the charts he presents here and you will
get 10 different interpretations whose is correct time will tell......but the arrogance of clive is what is unbeatable about the 10 articles.
Most analysts present in a humble way and leave something on the table whereas this critter is a winner takes all bloke.
To paraphrase a comment I read it went something like this in a 1000 point BULL market are you prepared to take a chance on the UTTER
RUBBISH maund has presented and trade out for perhaps 10% excluding dealing charges??>>>well think again!!
I have only listened and taken note of what billionaires and some millionaires say....they have been there , done it, got the bucks in the bank.

That said all I can ask the readers is has anyone seen the diamonds dripping from maunds fingers has anyone seen or counted his millions????

Can we liken this what u mc call it to the likes of James Dines,Harry Schultz,Richard Russell ??? OR has he got the track record of calling it Like
Gerald Celente......what are clivvy boys real credentials???

ANSWER TO THE ABOVE QUESTIONS NO
You are nuts gold bug He called the bottom early in the year and now the top. Gold is not ready for prime time just yet. We got to get all the gold bugs like you out first.
Latest comment posted for this article
You are nuts gold bug He called the bottom early in the year and now the top. Gold is not ready for prime time just yet. We got to get all the gold bugs like you out first. Read more
craunico - 3/27/2016 at 7:49 PM GMT
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