Top Advisors Corner

Tim Taschler: Gold Update & COT Report

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Gold has struggled after peaking at 1566 in late August. Since that point, peak gold has been in a slow chop lower, as this daily chart shows:

Source: StockCharts.com, 12/4/19

During this period, large speculators have held most of their record long positions, while commercials have held most of their record shorts, as this chart courtesy of Software North shows:

Source: Software North, 12/4/19

Looking at a weekly chart, one can see that gold rallied right up to horizontal resistance and then began to correct:

Source: StockCharts.com, 12/4/19

What I find interesting looking at this chart is that gold rallied 32% from the December 2015 low to the mid-2016 high. During that period, commercials ramped their short position up to what was then a new record short. Looking at this most recent move, gold has again rallied 32% to its August peak, while commercials bested their record short position from 2016 by a smidge. What we don't know is how big of a correction might be in store for the yellow metal. After the 2016 peak, gold corrected 18.75%. Granted, history doesn't always repeat, but it does often rhyme. If gold trades as it did after the 2016 episode, 18.75% takes it back to the 1300 level. Time will tell.

Questions and comments are always welcome: ttaschler@sprottglobal.com.


Tim Taschler, CMT

Sprott USA


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