JPMorgan Now Long Gold. A Game Changer?

Tuesday, June 11, 2013
By Paul Martin

Gold Silver Worlds
June 10, 2013

The latest futures positions report (Commitment of Traders, COT) shows the continuation of a pattern that started after the gold and silver price rally in August 2012. Especially the gold market is turning upside down. Why? Because of the gigantic spread between the speculators (increasingly short, although it somehow stabilized past week) and the commercials (increasingly long, although it stabilized as well past week). The below chart reveals this point; commercial positions are in green (close to net zero), speculators are in blue and red (also moving to net zero). As readers see, today’s positions are comparable to the ones at the end of 2008, right before a major upleg in the price of gold and silver price started. Does it mean that we are about to witness the same bull run? It could be although the big difference between now and then is that QE only started then while QE seems to becoming increasingly ineffective right now. Otherwise stated, the central bank has created +2 trillion US dollars between now and then, while other central banks across the world have created similarly huge amounts of money to combat deflation. Chart courtesy: sentimentrader.com.

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