Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Bullish COT Data Sets Stage For Higher Gold

|Includes: ABX, FCX, GG, SPDR Gold Trust ETF (GLD), NEM, SLV

Each Friday, we put Commitment of Traders data under the microscope. Specifically gold, or (SPDR Gold Trust ETF (NYSEARCA:GLD)"). Most weeks it's pretty ho-hum. Last week -- Friday May 4, 2013 --- anything but

We did a double take:

Net commercial shorts minus net commercial longs was in five figures. In the raw data, , it's a calculation we do: we take Comm_Positions_Short_All and subtract Comm_Positions_Long_All. "Comm" stands for commercials, i.e. producers, the likes of ("American Barrick (NYSE:ABX)"), ("Goldcorp (NYSE:GG)"), (Newmont (NYSE:NEM)", (Freeport McMoRan (NYSE:FCX)") et al.

Today -- Friday, May 10, 2013 -- it is even lower.

The fundamental reason you should pay attention to these numbers:

What is the significance of COT data showing a rock bottom "net commercial shorts"? This is the hedge position of ABX, GG, NEM, et al. These are the producers, typically the ones who "know" when to sell short, when to back off and wait for higher prices. They are not always right, and these numbers are not infallible, but usually doesn't pay to bet against them.

As a side note, JP Morgan this week called for $1700 gold by year end, and an average $1700 through 2014.

Is sentiment turning -- as well as fundamentals?

For context, here is some of our historical data, from our spreadsheet Option Wizard® Trading Method Gold:

Gold price

COT report date

Comm_Positions_Short_All minus Comm_Positions_Long_All

1444.00

5/10/2013

87,719

1470.70

5/3/13

95,563

1471.50

4/26/13

104,388

1405.50

4/19/13

141,929

1487.70

4/12/13

143,802

1578.30

4/5/13

142,522

1598.25

3/29/13

158,473

1607.90

3/22/13

162,364

1592.90

3/15/13

142,121

1579.20

3/8/13

133,798

1576.30

3/1/13

137,620

1581.50

2/22/13

132,082

1607.00

2/15/13

160,653

1669.00

2/8/13

174,607

1668.10

2/1/13

167,097

1659.30

1/25/13

195,950

1685.00

1/18/13

185,113

1663.30

1/11/13

178,472

1656.80

1/4/13

188,659

1657.50

12/28/12

187,664

1655.50

12/21/12

202,134

1696.20

12/14/12

214,880

1704.50

12/7/12

217,596

1715.00

11/30/12

252,047

1752.00

11/23/12

236,064

1712.90

11/16/12

224,795

1730.80

11/9/12

207,742

1676.90

11/2/12

222,764

1712.10

10/26/12

232,665

1720.50

10/19/12

247,383

1755.80

10/12/12

266,988

1778.40

10/5/12

269,270

How long had that been? We went looking and found it: December 12, 2008 (See below). Four and one-half years ago.

1161.40

12/4/09

308,231

1166.50

11/27/09

306,104

1150.10

11/20/09

281,546

1118.50

11/13/09

282,784

1097.00

11/6/09

283,852

1046.10

10/30/09

283,479

1054.70

10/23/09

297,493

1052.90

10/16/09

295,926

1048.00

10/9/09

281,864

1004.00

10/2/09

275,234

990.70

9/25/09

287,610

1006.00

9/18/09

284,661

1005.70

9/11/09

270,797

994.10

9/4/09

216,708

956.10

8/28/09

211,342

953.90

8/21/09

204,545

953.60

8/14/09

222,905

956.00

8/7/09

228,193

953.20

7/31/09

202,521

952.30

7/24/09

204,226

935.70

7/17/09

182,287

911.70

7/10/09

191,307

932.50

7/3/09

197,818

938.60

6/26/09

194,430

933.70

6/19/09

207,368

938.80

6/12/09

225,047

954.30

6/5/09

226,521

979.10

5/29/09

208,136

956.70

5/22/09

183,065

931.20

5/15/09

171,180

914.50

5/8/09

160,445

885.30

5/1/09

153,419

912.70

4/24/09

149,608

866.80

4/17/09

153,509

880.00

4/10/09

153,223

894.30

4/3/09

181,926

923.00

3/27/09

181,289

952.60

3/20/09

175,684

928.10

3/13/09

172,851

938.40

3/6/09

188,401

942.20

2/27/09

190,936

994.70

2/20/09

196,360

941.10

2/13/09

188,712

911.00

2/6/09

177,589

926.10

1/30/09

158,376

895.20

1/23/09

138,931

841.00

1/16/09

141,563

853.60

1/9/09

149,482

876.80

1/2/09

142,773

877.80

12/26/08

132,797

837.50

12/19/08

123,111

817.00

12/12/08

94,872

756.40

12/5/08

101,865

814.00

11/28/08

93,235

800.20

11/21/08

71,116

741.80

11/14/08

69,496

733.90

11/7/08

76,406

721.80

10/31/08

85,076

731.60

10/24/08

108,793

785.10

10/17/08

125,743

849.90

10/10/08

131,307

834.80

10/3/08

140,838

880.30

9/26/08

141,276

871.30

9/19/08

103,022

763.70

9/12/08

93,984

801.40

9/5/08

97,265

Gold was $817 on that fateful day. One year later, it was $1161. A stunning 42% gain.

What is a 42% boost on $1470?

$2088.

So what is the meaning of today's 87,000 print?

Could it be telling us that May, 2014 gold may be selling for $2088? Or thereabouts? Could the recent take-down in gold prices be the massive head fake so many have written about?

Stay tuned.

Disclosure: I am long GLD.