Last month I started tracking the level of the commercial net short position in Comex gold as a percentage of total open interest in Comex futures. I noted that while off the extreme highs seen last year, the ratio was still at a rather elevated level, historically considered.
Here we are three COT reports later and the COT structure has yet to improve. Here is the updated chart of the ratio:
I've actually extended the series back to the 9/05/06 report to give a little more context. I have also included the 13 week moving average on the chart, the direction of which we might consider the primary trend in the Comex market structure.
With the ratio at 50.9 this week, it seems there is just as much speculative interest in gold now as at the interim price top two years ago.
I have been involved with gold since 2002, and in a professional capacity since 2003, and in my estimation there has in that time never been less reason to be positive on gold than now. Gold's internal momentum has been waning for years now, and for the past year it has exhibited extremely poor relative strength to competing assets, especially the stock market. As I wrote in the most recent Trend & Value Letter,
Gold can't even out-perform the Dow. Some Bubble!
Oh, there'll be a Gold Bubble, that's for certain. It just hasn't started yet.