Among its 29 pages of high quality market analysis, this week’s NFTRH (#287) reviewed the Commitments of Traders (CoT) structures of a few markets and their implications.
The above CoT graph clearly shows that gold has declined as the structure improved (red arrows). It then bottoms with the circled extremes and rises in conjunction with a degrading structure (green arrows). Gold is still on its journey toward bottoming.
CEF’s net asset value does not imply that the bugz are over bullish. Quite the contrary. It is selling at a decent discount to net assets and could be viewed as a long term value for those who don’t think that precious metals have gone the way of the Dodo Bird.
So as lame as the precious metals (esp. silver) have been acting, this is one for the bulls because it sure is not concerning that gold bugs are not putting their money where their convictions are.
Gold: Goons cover shorts, get less long. Large spec’s sell and get short. That means another incremental improvement this week.
The 10 vs. 2 year yield spread dropped, which was an in-day negative not to be given undue weight based on one day, but to be respected none the less. Interestingly, the sector went nowhere (GDX) to down (GDXJ, gold, silver) yesterday as the spread popped. Today spread down, sector up.
We should watch volumes today to see if there is enough conviction to get GDX, GDXJ and high profile individual miners above the moving average clusters they recently fell below. I’ll try to get a review of that after the market closes, assuming today stays positive.
Well, let’s just say that the baby trend continues in silver vs gold…
If silver takes leadership in the precious metals well, you know how that goes. I have bought, held and added to a silver bullion fund over the last few weeks and it has not been fun. But I did not think of selling it because silver has not broken critical support and the ratio above appears to be holding support as well.
Guest Post by Steve Saville
 Horning in a little on Steve’s post, the chart below was included in an NFTRH update on March 14, with this observation:
“While the GSR [gold-silver ratio] and HUI have indeed spent most of their time in negative correlation, the launch phase of the bull market (2000-2003) was different.”
Also, recall this public post yesterday: Silver-Gold Ratio, Bottom Retest Completing? Bottom line, Steve Saville’s views are in line with my own regarding the gold/silver relationship.
Gold vs Silver
We most recently discussed the long-term performance of the gold/silver ratio only two months ago, but the subject is sufficiently important to warrant some repetition. So, without further ado and with reference to the following monthly chart, here are the main points we made in our 4th February commentary: