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Gold in the Near-Term


Gold speculators are currently about as long gold futures as I have ever seen them.


Editor's Note: The following content appeared on the Buzz and Banter today at 10:23 AM and is being reprinted here for the benefit of the borad Minyanville community.

Gold speculators are currently about as long gold futures as I have ever seen them. At first, I thought this would be bearish and would probably limit any upside in gold in the near-term. But after a little research, I found an interesting analog. See the chart below. Back in 2005 (around the end of September) gold speculators (white line) made a massive bet on gold (red line). They went net long over 200,000 gold futures contracts shortly before gold ripped from $450 to $700+. Talk about smart money!

Click to enlarge

The $450 level in 2005 was very similar to today's $750 level (see chart below). I think we could see a similar run in gold once we break through $750 that takes us over $1,000 gold in the next six months.

Click to enlarge

Stocks I like (which also includes some silver names) include:

  • Goldcorp (GG)
  • Yamana Gold (AUY)
  • Newmont Mining (NEM)
  • Silver Wheaton (SLW)
  • Pan American Silver (PAAS)
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Position in AUY, SLW, NEM

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