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Speculators exit gold longs

  • Alongside the decline in gold prices to levels not seen since January is a sharp fall in speculative long bets on the metal to levels not seen since January. According to CFTC data (as reflected in this great graphic from Reuters), pros are net long 51K gold contracts, nearly 100K less than 3 months ago.
  • Gold today is ahead $2 per ounce to $1,254.
  • ETFs: GLD, IAU, SGOL, UGL, DGP, GLL, UGLD, DZZ, GLDI, DGL, DGZ, DGLD, AGOL, OUNZ, TBAR, UBG, GYEN, GLDE, GEUR, GLDL, GLDS, GGBP
Comments (41)
  • Doug Eberhardt
    , contributor
    Comments (2784) | Send Message
     
    Speaking of gold speculators (and my latest thoughts on gold);

     

    Why the Predictions of Hyperinflation and Economic Collapse Were Wrong http://bit.ly/hyperinf...
    9 Jun, 01:33 PM Reply Like
  • AF1951
    , contributor
    Comments (23) | Send Message
     
    Doug, your article is very interesting and I will not argue about the situation in the US since I don't live there (although food prices in CA supermarkets seem to me quite high compared to Bavaria where I live). In Germany, food prices have been relatively stable but there is no question that we have been hit by high price inflation in different areas, including public transport and real estate to the point that the German government is alarmed about it. Whether this is due to QE in the US or something else, I do not know, but the fact is that price inflation exists and it hurts.
    9 Jun, 02:38 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2784) | Send Message
     
    AF, thanks for the comment.

     

    My article wasn't really about inflation from a price structure point of view. Yes, prices are rising in items, but overall, the economies of the world are experiencing deflation, which is being fought tooth and nail by the central banks. Negative interest rates with the ECB is a first. The Fed can still do more if necessary and many don't realize they still are fighting deflation to the tune of $45 billion a month in QE.

     

    Food prices have recently been affected by the drought in California. If you look at the 5 year chart of the CRB index, you will see we have been in a down trend with a blip up since the end of December.

     

    Silver is acting deflationary and gold has performed more like a monetary metal (isn't affected as much by deflation) but still has some room to fall further.

     

    Will be interesting to see where we bottom, but prices don't mean much to me. Of course purchasing power does, and that's why you own some gold and silver. But timing a buy right now, I have been in the camp of hold off.

     

    Prices of things can be up or down for a multitude of reasons. In a nutshell regarding prices; anything the government is involved in, the prices are rising. Anything drought related, the prices are rising. Anything weather related, the prices are rising. This can give one the impression that we are undergoing serious inflation.

     

    Anything commodity related, the prices have been falling since 2011 and since nothing falls straight down, an investor has to decipher where we are headed next with this current bounce. I make the case for deflation still.
    9 Jun, 03:46 PM Reply Like
  • fred1724
    , contributor
    Comments (64) | Send Message
     
    I'd love to see anything resembling deflation at the supermarket. Even level prices have smaller packages. Inflation there seems about 8%.
    9 Jun, 05:54 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2784) | Send Message
     
    fred, you are confusing prices with inflation/deflation. Prices are typically the result of inflation in some books, but it's a side show to the economic forces in play. When you have trillions in credit from the boom (inflationary) period, the subsequent deflationary contraction can take awhile to unwind. That's what the Fed is fighting. Wait for money velocity to kick in before you see inflation take off. Right now the Fed has said they will keep rates low till 2016. We'll see what the market says about that. Right now, my indicators are showing a stronger dollar and treasuries. That coupled with a stock market breaking to new highs is putting pressure on gold and silver and can potentially cause more selling.

     

    The Fed and Congress threw $9 trillion at this and we still can't get the ball rolling with GDP. But some has seeped out into the areas where we are of course frothy.
    9 Jun, 06:14 PM Reply Like
  • pollyserial
    , contributor
    Comments (1064) | Send Message
     
    Love your comments, Doug. I would add that Gold in my view is not at the moment correlated with inflation, but rather closer to the VIX. Both are insurance against central banking, pure and simple. As long as the bankers are successful at projecting confidence in their control, Gold and VIX will remain challenged. That said, I am watching gold (and VIX) very closely at this level (like many people, I'm sure) because big rallies have occurred from here and the short interest appears to be high.
    9 Jun, 07:02 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2784) | Send Message
     
    Stop giving away my secrets polly!

     

    Thanks for the compliment. You are right. VIX has been telling. Only part of what I watch, but everything combined helps me try and make directional calls.

     

    You are right in your description of yourself about trading taking up your time. It can get the best of you and sometimes it pays to step away and clear the mind.

     

    Cheers!
    9 Jun, 07:19 PM Reply Like
  • 6151621
    , contributor
    Comments (1174) | Send Message
     
    Very interesting article. I listen to people like Celente and feel they make a lot of sense but then markets aren't about making sense so I try to hedge they're influence by reading others such as SA comments. Thanks for the perspective Doug.
    10 Jun, 12:26 AM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2784) | Send Message
     
    Hi 615...thanks. Just call it like I see it.

     

    Seems like gold wants to go higher for a bounce now, and I keep thinking we'll bounce but I like the risk reward shorting this market better. Got stopped out last week on a short, but back in TZA for a trade.

     

    Gold will do what it does short term, and will trap a few along the way I think on any bounces. But I have to see that break to a new low to be happy. We shall see. If I'm right, then I'll look for a point to be bullish and write my all-in article. If I am wrong, then well, it's interesting...I'm typing this sentence and I just can't come up with a bullish scenario outside of short term moves. So gold will just have to prove it to me. Maybe that's intuition. We shall see.
    10 Jun, 01:31 AM Reply Like
  • CoinsK
    , contributor
    Comments (3005) | Send Message
     
    Doug I have just decided to buy my 2cnd purchase of ASE (1 Monster box ) for 2014 . I had 3 boxes in January and they were fast moving. I can replace those at $21.01 per coin right now ,so I see no reason to wait . However I am taking into consideration that you may be right about a lower bottom. At any rate I see the price as too good to pass up on these as people still want to buy them at a retail price ( for me at least ).Thanks for continuing to contribute to SA in a positive manner.
    10 Jun, 07:19 AM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2784) | Send Message
     
    Cool CoinsK...

     

    I could and can make some easy sales just by writing my all-in article. It's not like I don't want to make money, lol. But despite any bounces, want to see what I want to see.

     

    We may get a pullback in the stock market (counting on that) at this point. Money may want to try and find a home in other places like gold and silver if we do. Depends on how much of a pullback.

     

    Time will tell on the bottom. As I tell folks, a few years from now when you are sitting on a 50% or an 80% return, will it really matter? Both of those investors aren't really going to complain too much (years and percentages may vary of course). My recommendation all along is still to dollar cost average into one's allocation, taking price out of the equation. They get an overall better price, especially with falling prices.

     

    Thanks for the nice compliment and good luck and keep up the good fight yourself! I know you are busy doing so!
    10 Jun, 12:30 PM Reply Like
  • fred1724
    , contributor
    Comments (64) | Send Message
     
    Food and gas prices are not inflation? I'll tell my wallet.
    15 Jun, 07:38 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2784) | Send Message
     
    fred1724, why is the Fed doing QE (inflating)? They are fighting deflation ala Bernanke's 2002 speech, "Deflation; It won't happen here." So they are inflating, but look at money velocity. It's having no effect (or seeping into financial areas of course).

     

    Higher food and oil prices can be explained away by droughts and threats of war from a short term view. The CRB index has been in a downtrend since 2011 and this is a blip up. We'll see how long it continues (or the drought and war threat affect continues).

     

    Inflation will come when money velocity picks up.
    16 Jun, 11:22 AM Reply Like
  • David at Imperial Beach
    , contributor
    Comments (3762) | Send Message
     
    What is important is that the change is mostly the opening of new short contracts. This is actually bullish for gold as it obligates the speculators to buy gold in the future to unwind their positions.
    9 Jun, 01:35 PM Reply Like
  • jj1937
    , contributor
    Comments (904) | Send Message
     
    Great to see new shorts. Burn the shorts.
    9 Jun, 05:11 PM Reply Like
  • mdsands
    , contributor
    Comments (4) | Send Message
     
    I agree with David.......the U.S. will just keep paying billions of newly printed dollars to aid countries that actually hate America. We DO NOT have the gold to back this currency and this is what will doom America. We must go back on the Gold Standard before we print ourselves into oblivion. The worst part is that we absolutely must stop supporting countries outside the U.S., and begin taking care of our Veterans and people in America that don't have enough to eat! The Executive Branch of our Government is so out of touch. It's a sad situation.......
    9 Jun, 02:00 PM Reply Like
  • pollyserial
    , contributor
    Comments (1064) | Send Message
     
    I personally don't agree with that, for better or worse IMO it would be catastrophic to go back on the gold standard at this point. We just need reasonable and cautious central bankers. Which unfortunately doesn't seem likely to ever happen.
    9 Jun, 07:04 PM Reply Like
  • ddearborn
    , contributor
    Comments (124) | Send Message
     
    Hmmm

     

    Yet another deceptive article designed to help push prices down. For the record the facts are this, from the June 6 COTS Report:

     

    Gold COT Report - Futures & Options Combined
    Totals- Long 563,549 Short 566,591
    Change 1,126 -1,196

     

    The biggest decline was NOT large speculators "exiting" their long positions
    but in fact Commercial investors EXITING THEIR SHORT POSITIONS!

     

    Though it seems to me that in reality the overall net result is a wash. This is a classic case of utilizing the omission of key facts to deceive the reader. In my humble opinion of course.
    9 Jun, 04:07 PM Reply Like
  • rubber duck
    , contributor
    Comments (193) | Send Message
     
    We know the pros would never try to influence gold/silver prices, like LIBOR, it would be far too complicated. Would NEVER happen.
    9 Jun, 05:06 PM Reply Like
  • MisterJ
    , contributor
    Comments (635) | Send Message
     
    Can you say totally missed the bus? Who in their right mind is still long an asset losing and depreciating since 2011, especially since you could have made money with pretty much every other asset class out there? Welcome to reality, gold "speculative long bets". You messed your own money and -even worse- that of your clients who trusted you.
    9 Jun, 04:45 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2784) | Send Message
     
    MisterJ,

     

    You make multiple assumptions in your attempt to disparage those who bought gold. First, you assume everyone bought higher than the current price. Second, you assume that they didn't invest in anything but gold. Third, you assume clients have lost when they haven't even sold.

     

    GLD is still up 5.56% year to date. S&P 500 up 6.44% and gold miners up more.

     

    If one bought either the S&P 500 today at all-time highs or gold that has been beaten down, which is the better risk reward?

     

    Easy to cherry pick dates, isn't it?
    9 Jun, 05:08 PM Reply Like
  • CoinsK
    , contributor
    Comments (3005) | Send Message
     
    Mister J ,are you advocating that investors should wait for metals to go higher before buying. How about applying that to the stock market post 2008 crash. So that means we should not buy low and sell high ,just like we do with stocks?do you think we should buy more stocks when the market (as artificial as it is) goes above 17,000?
    10 Jun, 07:26 AM Reply Like
  • Chris Bersaw
    , contributor
    Comments (584) | Send Message
     
    Not quite, gold speculative longs dropped 30,511 from the 3/18 highs to 121,428 (as of 6/3), nothing close to the figure implied here. However what is significant is the increase in speculative shorts over the same time, up 56,854 to 70,364 but too few in number to really push prices lower at this time.
    9 Jun, 05:04 PM Reply Like
  • rubber duck
    , contributor
    Comments (193) | Send Message
     
    Demand for physical gold in 2014 continues to outpace the all time high of 2013. People know the game can't go on forever. Paper contracts keeping a lid on gold should be used to your advantage.
    9 Jun, 05:04 PM Reply Like
  • sunnie tran
    , contributor
    Comment (1) | Send Message
     
    Doug Eberhardt is right . Gold is going down to 1100 Oz by end of July . SHORT THIS PIG!!!!!! been Up for the past 12 years. the Gold Bull are out of energy .
    9 Jun, 05:23 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2784) | Send Message
     
    sunnie, I am not sure where you got that I am calling for a gold price by a certain date. I am careful not to do that. Please note what I say in my articles as you cannot quote such a thing. And I hardly call gold a "pig." Far from it. I do see lower prices ahead and am bullish longer term. I will call my turning points the best I can when the time is right. I don't know what the price will be at that time. But I'll be LOUD and CLEAR about my bullishness.
    9 Jun, 05:31 PM Reply Like
  • Chris Bersaw
    , contributor
    Comments (584) | Send Message
     
    For gold to drop further, we need to see more selling from either new shorts or profit-taking from existing longs neither of which is happening. Also don't for about the significant support around 1200 an area that buyers have successfully defended several times previously.
    9 Jun, 08:57 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2784) | Send Message
     
    Chris, we are in a trend that will break one way or another. My data tells me lower. While the 1180 area is a triple bottom support, I think we break through it to lower lows.

     

    My articles over the last year detail my reasoning.

     

    By the way, saw your profile. My father worked at the former CBOT. One of the last to have a 2 letter initial badge. He turns 80 this year, but still trades.
    9 Jun, 09:51 PM Reply Like
  • CoinsK
    , contributor
    Comments (3005) | Send Message
     
    Gold has NOT been up the last 12 years . It has been down for 2 years in a row. Short it? Really ? What about people that have only 401K and IRA accounts and don't "Trade" and bet the market? Now is a better time to accumulate then it was in 2011.
    10 Jun, 07:30 AM Reply Like
  • Uncle Pie
    , contributor
    Comments (2863) | Send Message
     
    the supply of paper money is growing rapidly all over the world while the gold mining industry struggles to increase the supply of gold by 1 or 2% per annum. History shows taht when something becomes more abundant, its price drops, whereas when something becomes scarcer, its price must rise. Paper money is becoming much more abundant, while the supply of gold is scarcely increasing at all. In the short term, the machinations of the hedge funds will determine the number of paper dollars required to buy an ounce of gold, but in the long run, supply and demand will determine that number.
    9 Jun, 09:19 PM Reply Like
  • d.chavo
    , contributor
    Comments (38) | Send Message
     
    China is still buying huge amounts. They are just importing less from Hong Kong. They know the data from HK tens to push up prices and the Chinese govt. are long term holders and not day traders. Also, most importantly Goldman Sachs just brought $580 million worth of gold from Ecuador and is due to sell it back in 3 years. Enough said!!!
    9 Jun, 10:34 PM Reply Like
  • james.
    , contributor
    Comments (276) | Send Message
     
    READ THE TAPE PEOPLE ! GOLD IS UP AGAIN TODAY, AND CRUDE OIL IS SOARING ABOVE $104 PER BARREL , WHICH INFLATION WILL DRIVE UP GOLD & SILVER PRICE ALL THE MORE BECAUSE THE FRB INFLATION INDEX DOESN'T INCLUDE PRICE INCREASES IN FOOD & FUEL ! THEREFORE, THE HEADLINE CPI INFLATION INDEX CAN RISE WITH IMPUNITY FROM ITS CURRENT LEVEL AT 2.4% YEAR-OVER-YEAR TO 5% BY JAN 2015 AND TO 8% BY JAN 2016. CHARLES EVANS, PRESIDENT OF THE FR BANK OF CHICAGO, SAID IN AN ALL-IMPORTANT SPEECH LAST WEEK THAT THE FRB WON'T RAISE THE FED FUNDS RATE UNTIL EARLY 2016, WHEN THE FRB INFLATION INDEX HAS BEEN SOMEWHAT ABOVE 2% FOR A WHILE. JUNE 10, 2014 AT 12:23 A.M. PDT.
    10 Jun, 03:24 AM Reply Like
  • Alex Winter
    , contributor
    Comments (28) | Send Message
     
    If you're long physical gold for the long term (like I am) there's an easy way to make money on the short term fluctuations. It's the DZZ, 2x leveraged inverse gold ETF.
    When gold rebounds, go long the DZZ which is essentially insurance for your physical gold position. When gold sells off, take profits in your DZZ and reinvest in the physical.
    I've been doing this for years quite profitably. Yes it does take a bit of capital to buy both physical gold and the DZZ hedge / insurance but it's worth it.
    If gold goes back down to $1050 the way Goldman and other are predicting, you've got very healthy profits in DZZ.
    You can also do this with silver via the DSLV but that is more volatile and isn't for the faint of heart.
    This strategy isn't for people investing in metals via paper, it is for long term holders of the physical metal.
    Good luck to all.
    10 Jun, 03:25 PM Reply Like
  • james.
    , contributor
    Comments (276) | Send Message
     
    GOLD & SILVER ROCKETED HIGHER TODAY PEOPLE !! READ THE TAPE PEOPLE, READ THE TAPE !! JUNE 10, 2014 AT 5:13 PM PDT.
    10 Jun, 08:14 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2784) | Send Message
     
    Rocketed? and when gold falls $8 is it plummeted?

     

    Gold is down $42 the last 30 days.

     

    Gold is down $132 the last year.

     

    Gold will shine again, but your use of caps and terms like "rocketed" for a one day move are spamish in nature.
    10 Jun, 09:28 PM Reply Like
  • james.
    , contributor
    Comments (276) | Send Message
     
    FACTS ARE FACTS DOUG EBERHART !! THIS ONGOING HISTORIC GOLD BULL MARKET STARTED AT $253 PER OZ CIRCA 2000, AND HAS RISEN NOW TO $1260 PER OZ, A RISE OF 400% IN 14 YEARS ! THE 2ND LEG SUPER CYCLE WAS CONCLUDED CLASSICALLY WITH A 50% CORRECTION IN DEC 2013 WHEN GOLD DID DOUBLE-BOTTOM AT $1186 PER OZ IN DEC 2013. GOLD IS NOW RISING UP ON ITS 3rd LEG SUPER CYCLE TO CLASSICALLY MAKE NEW ALL-TIME HIGHS OF $2700 PER OZ CIRCA JULY 2015 WHEN SILVER WILL BE AT $54 PER OZ.
    YOU APPARENTLY MISSED THE ALL-IMPORTANT SPEECH MADE LAST WEEK BY FRB MEMBER CHARLES EVANS, FR PRESIDENT OF BANK OF CHICAGO; HE CLEARLY STATED THEREIN THAT THE FRB WON'T RAISE ITS FED FUNDS RATE UNTIL EARLY 2016 WHEN ITS INFLATION INDEX HAS BEEN SOMEWHAT ABOVE 2% FOR A WHILE; THAT INFLATION INDEX DOESN'T INCLUDE PRICE INCREASES IN FOOD & FUEL. THE CPI HEADLINE INFLATION INDEX IS NOW UP 2.4% YEAR-OVER-YEAR; CRUDE OIL IS NOW SOARING OVER $104 PER BARREL DUE TO UKRAINE CRISIS, AND UNREST IN IRAQ WHERE MOSEL HAS FALLEN TO MILITANTS AND TO UNREST IN LIBYA ALSO; FOOD PRICES ARE RISING AND WILL CONTINUE TO SOAR DUE TO THE CALIFORNIA DROUGHT AND THE EL NINO DELAY IN THE MONSOONS OVER INDIA; THESE CONFLUENCE OF EVENTS CAN THEREFORE DRIVE UP WITH IMPUNITY THE HEADLINE CPI INFLATION INDEX ABOVE 5% BY JAN 2015, AND 8% BY JAN 2016, AND THEREBY DRIVE UP GOLD & SILVER PRICES AS I STATE IN MY 1st PARAGRAPH ABOVE. JUNE 10, 2014 AT 9:34 PM PDT.
    11 Jun, 12:34 AM Reply Like
  • 6151621
    , contributor
    Comments (1174) | Send Message
     
    @James: I think your writing for yourself or emotional impact. I can't think many people will feel like reading a long entry all in caps without section breaks. Go back to some goldbug blog or something. Oh yeah. I agree with Doug. When gold goes up $60 in a day from here maybe I'll say that's rocketed higher but not this small move. (If you are a short term trader, then yes it rocketed $8 in two minutes shortly after the COMEX open on decent volume but that was it--it backed and filled the rest of the day).
    11 Jun, 12:45 AM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2784) | Send Message
     
    I really did hesitate 615...lol
    11 Jun, 01:57 AM Reply Like
  • james.
    , contributor
    Comments (276) | Send Message
     
    FACTS ARE FACTS DOUG EBERHARFDT. THIS ONGOING HISTORIC GOLD BULL MARKET STARTED AT $253 PER OZ CIRCA 2000, AND IS NOW AT $1260 PER OZ, AN INCREASE OF 400% IN 14 YEARS. THE 2nd LEG SUPER CYCLE CONCLUDED IN A CLASSICAL MANNER WITH A 50% CORRECTION IN DEC 2013 WHEN GOLD DID DOUBLE-BOTTOM AT $1186 PER OZ. GOLD IS NOW RISING UP ON ITS 3rd LEG SUPER CYCLE , CLASSICALLY CARRYING GOLD & SILVER TO NEW ALL-TIME HIGHS OF $2700 AND $54 PER OZ CIRCA JULY 2015, RESPECTIVELY.
    THE HEADLINE CPI INFLATION INDEX IS NOW AT 2.4% YEAR-OVER-YEAR, AND CAN RISE WITH IMPUNITY TO ABOVE 5% AND 8% IN JAN 2015 AND 2016, RESPECTIVELY, THUS DRIVING UP GOLD & SILVER AS STATED IN MY 1st PARAGRAPH ABOVE. THE FRB INFLATION INDEX DOESN'T MANIFEST PRICE INCREASE IN FOOD & FUEL, AND SO THE 1st INCREASE IN FED FUNDS RATE WON'T OCCUR UNTIL EARLY 2016 ACCORDING TO FRB MEMBER CHARLES EVANS WHEN THAT INFLATION INDEX IS SOMEWHAT ABOVE 2% FOR A WHILE. CRUDE OIL IS SOARING FROM UNREST IN IRAQ (MOSEL FELL TO MILITANTS TODAY) AND LIBYA, PLUS THE UKRAINE CRISIS, PLUS WORLDWIDE DEMAND-PULL-INFLATION FROM EXPANDING ECONOMIES ! LOOK TO IT !! JUNE 10, 2014.
    11 Jun, 12:47 AM Reply Like
  • 6151621
    , contributor
    Comments (1174) | Send Message
     
    @james. You might be right. However, (1) I don't think Doug says this isn't a primary bull but short term it's still down. (2) Calm down on the CAP LOCK.
    http://bit.ly/1jvUcFF (check out readibility: most view ALL CAPS as less legible.) Consider this james: You really don't want people to read your comments?! Then, ask yourself why comment? I think Doug and I have an idea, do you?
    17 Jun, 07:31 AM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2784) | Send Message
     
    615, yeah...he is new here and doesn't know where I stand. I mean...I sell the stuff, you know? lol...

     

    Don't know why he uses caps. I guess shouting he is heard more? Don't know.

     

    Gold down a lot earlier but nice bounce back off the lows. Could have one more move higher before final take down (if I'm right). These things don't play out overnight.

     

    I did get asked to be interviewed about my thoughts on silver for a South Dakota radio station. Interview is on the 23rd. Not sure when it will air, but will try and post to my site.

     

    Cheers!
    17 Jun, 10:06 AM Reply Like
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