Gold News

Gold Positioning Unchanged by Goldman

Gold's "failed break-out" fails to materialize despite the Goldman Sachs' price drop...


GOLD TOOK
an honest (or dishonest?) shot at giving the gold bears a failed breakout on Monday last week, following the SEC vs Goldman Sachs news, writes Gene Arensberg in his Got Gold Report.

But each time gold attempted a run into the $1130s, the yellow metal met with determined bidding. We can believe that technically minded traders all noticed the support which formed there. So moving on from here, we will mark the high $1120s as potential support with potential resistance well above in the $1160s – until proven otherwise on both counts.

Once again we reiterate our longer-term view that the world will most likely continue down a path of fiat currency debasement, weakening confidence in all fiat currencies. We see the setup as long-term very bullish for gold metal and extraordinarily bullish for silver looking well ahead – if the world "holds it more or less together."

Looking at the Goldmans case, and as the United States Congress mulls a bill to create yet another regulator and another oversight bureau, opponents of even more government regulation were given a shot in the arm by news that, apparently, some SEC employees were caught with their pants down so to speak.

Amid the worst financial slump since the Depression, it seems about 30 of the regulators' staff spent their daytime watching porn on our dime (with at least one filling up his computer hard drive with graphic images) instead of doing the people's business. Going after guys like Bernie Madoff and Alan Stanford just isn't as interesting as watching hard-core video and such, apparently, to name just the most recent high-profile cases of government regulator fumbling.

At least we have more information now to understand what SEC rank and file consider as high priorities during a sure-enough financial crisis. Why does Elliot Spitzer come to mind now? He didn't even work for the SEC.

Normally we wouldn't "schtupp" so low as to bring it up, but dog-gone it, we just don't need another regulator in the US. We don't need more regulations and more big government. We have plenty already, thank you very NOT. What we do need, in contrast, is for the agencies and regulators we already have to, oh, maybe actually do the work they are paid to do and oh, maybe enforce the regs already in place...

Still, with the SEC split about whether or not – and how – to go after Goldman Sachs, the Big Sellers of gold and silver got chance to knock the weakest of the longs out of the game – until now.

With that, uh, "short" intro, let's take a look at what the largest of the largest traders of gold and silver futures in New York did right after that sneak attack on the House of Blankfein, aka Goldman Sachs. The latest Commodities Futures Trading Commission (CFTC) weekly commitments of traders (COT) report is for the close of trading as of Tuesday, April 20.

Today, the Got Gold Report is focused on the changes in positioning of the largest futures traders in that report – the traders the CFTC classes as "commercial". We refer to those commercial traders in US Comex Gold Futures as "LCs" for "Large Commercials".

Gold Prices dipped a net $10.34 or 0.9% to $1,140.56 for the week-ending Tues 20 April. Over that time, which included the Goldman Sachs sell-off, commercial traders reduced their combined collective net-short positioning (LCNS) by a smallish 6,088 contracts or 2.3% from the week before. The total open interest fell by a slightly higher 7,518 contracts to 521,338 contracts open.

Remember that is as of last Tuesday's close, before the Goldman damage control stories were put out and before we learned that the decision by the SEC to take on Goldman Sachs was anything but unanimous. All we'd had was the sharp drop in prices.

Yet not really very much changed in the "commercial" players' positioning. And when compared to all contracts open, the relative commercial net short positioning (LCNS:TO – the most important graph we track) actually fell about half a percentage point from 49.82% to 49.37% of all Comex gold contracts open.

The LCNS:TO really didn't move very much on the SEC shot across Wall Street's bow in other words. We cannot point to either aggressive selling or short-covering in this report...

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A land developer, professional numismatist, self-taught bullion trader and investor since 1980, Gene Arensberg analyzes technical and fundamental developments in the precious metals markets. In 2000 Gene started sharing his own market research with fellow traders and fund managers. Those email reports evolved into his popular Got Gold Report, a biweekly look at important indicators for gold and silver published on the web. Gene's more in-depth market reports, insights and trading ideas are available at GotGoldReport.

See the full archive of Gene Arensberg.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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