The Gold-Bugs Don't Like To Hear It, But Their Love Interest Is Vulnerable

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Includes: GLD
by: ANG Traders

Summary

The FED is still committed to raising rates, although more slowly than at the end of last year.

Gold and the 30-year bond are once again synchronized.

Commercial gold futures traders haven't been this short in a very long time.

We have taken considerable on-line criticism (and even insults) for our probability calculations that point to a decline in gold prices for the medium-term. Despite the push-back from the gold-bug-perma-bulls, the picture is still pointing to a decline in gold prices, and as long as the FED continues to favor a tightening stance, the path of least resistance for gold will be down.

The chart below, demonstrates the synchronized move between gold and the 30-year bond (blue rectangle).

Click to enlarge

Below is a comparison of the gold price with the commitment of traders. Notice the continued high short interest of the commercial traders which indicates their expectation of a future price drop. We remind readers that commercial traders are usually correct.

Click to enlarge

Click to enlarge

Notice also how speculators, both small and large, are more heavily committed to the long side than at any time in the previous twelve months. They are usually wrong, and this time isn't likely to be any different.

The long play in gold is too crowded and the exits are narrow; bulls will pay dearly to get out in a panic.

Disclosure: I am/we are long GLL.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.