Bullion Bull Over? Data Suggests Temporary Pause

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The latest Commitments of Traders (COTs) report issued last Friday, Nov. 16, suggests the recent explosive rise in precious metals prices may not yet be at an end. How do we know this? The small traders in gold and silver have built highly bearish derivatives since the summer, and they’ve remained resolutely gloomy about bullion despite the ramp-up in prices.

...In strange times like these, a growing number of market players is turning for illumination to the Commitments of Traders reports. This is the free government data released each week by the U.S. Commodity Futures Trading Commission. The regulatory agency collects data on trillions of dollars of futures and options holdings in 100-odd markets—everything from the S&P 500 (SPY) to the NASDAQ 100 (QQQQ), crude, soybeans and the euro (IEV).

The data is difficult to interpret, but research has shown it can warn of possible market turns when traders hit historic extremes in their positioning.

The latest COTs report issued last Friday, Nov. 16, suggests the recent explosive rise in precious metals prices may not yet be at an end. How do we know this? The small traders in gold and silver have built highly bearish derivatives since the summer, and they’ve remained resolutely gloomy about bullion despite the ramp-up in prices.

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