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Gold ETFs finally added to physical gold holdings after 33 days of sales which Bloomberg data says was the longest streak since Negative sentiment abounds in the speculative gold market, thus for investors that see value in gold, now forrx a good contrarian time to buy. After starting the year with a bang, the last Commitment of Traders COT report shows gold ends with a muffle, as for a seventh straight week, speculative traders lowered their gold positions.

But despite the trader negativity, gold rose on the com,itment, which is not unheard of - but it usually portends a short-term turnaround for the metal. Also, we saw something else very interesting last week as gold ETF holdings broke its day losing streak, the longest sinceas ETFs finally increased physical gold holdings. We will give our view and will get a little more into some of these details, but before oytlook let us give investors a quick overview into the COT report for those who are commitjent familiar with it.

The COT report is issued by the CFTC every Friday to provide market participants a breakdown of each Tuesday's open interest for markets in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC. In plain English, this is a report that shows what positions major traders are taking in a number of financial and commodity markets.

Though there is never one report or tool that can give you certainty about where prices are headed in the future, the COT report does allow the small investors a way to see what larger traders are doing and to possibly position their positions accordingly. For example, if there is a large managed money short interest in gold, that is often an indicator that a rally may be coming because the market is overly pessimistic and saturated with shorts - so you may want to take a long position.

The big disadvantage to the COT report is that it is issued on Friday but only contains Tuesday's data - so there is a three-day lag between the report and the actual positioning of traders. This is an eternity by short-term investing standards, and by the time the new report is issued, it has already missed a large amount of trading activity. There are many different ways to read the COT report, and there are many analysts that focus specifically on this report we are not one of them so we won't claim cftc commitment of traders forex outlook be the experts on it.

What we focus on in this report is the "Managed Money" positions and total open interest or it gives us an idea of how much interest there is in the gold market and how the short-term players are positioned. This week's report showed a drop in speculative gold positions for a seventh straight week, as longs decreased their positions by a chunky 6, traderrs on the week.

On the other side, speculative shorts increased their own positions by 6, contracts on the week. Source: GoldChartsRUS The red line represents the net speculative gold positions of money managers the biggest category of speculative traderand as investors can see, the decline in speculative traders continues. As we said last week, we are now at some of the lowest speculative levels of the past decade, though we haven't yet hit the lows we saw at the end of before gold's spectacular rise earlier this year.

Sentiment wise, speculators want nothing to do with gold and are stampeding out. Money managers are only net long 41, contracts, while producers and merchants are steadily increasing their positions. Source: GoldChartsRUS The red line, which represents the net speculative positions of money managers, showed a drop in speculative positions for the week which should be no surprise since silver tends to track gold.

This suggests to us that, at least per the COT report, gold remains much more oversold than silver. We still like silver for other reasons, but silver speculative trader positions remain relatively high compared to their gold counterparts. For more than a month, ETF gold holdings have been sold off, and according to Bloomberg, experienced their longest gold disbursement streak since Source: Bloomberg Our data is cftc commitment of traders forex outlook bit more inclusive than Bloomberg's as we include mutual funds and gold repositories, but it shows the same massive decline in gold holdings.

Source: GoldChartsRUS The correlation with gold ETF holdings is very clear from the chart above, and even though it is not a major increase over the last week, it is something for gold bulls to monitor as transparent gold holdings increased. Balikpapan id bpn are working on our "Gold Looking Forward" piece to detail why we think gold is an excellent investment as we closebut strictly based on the COT report gold looks extremely fraders after seven consecutive weeks of speculative traders lowering their net long position.

Cfct speculative traders holding a little over 41, net long gold contracts, we are at some of our lowest levels since early February - gold has truly retraced most of its gains. Additionally, when compared to the net speculative position over the last 10 years, we are close to some of the lowest net speculative long levels that we have seen in gold.

This makes it simple when it comes to gold because if you are an investor who believes that any of the following could occur in Then now makes an cftc commitment of traders forex outlook time to buy gold as speculators are at some of their lowest net long levels over the past decade. We believe much of these are not priced in by markets, and if one or more of these things occur, then gold should have another good year in Thus, based on the extremely negative sentiment by gold speculators, this makes it a very good time to buy gold strictly based on it unpopularity.

Contrarian investors should seek to accumulate gold and the ETFs such as the SPDR Gold Trust ETF NYSEARCA: GLDthe Pf Physical Swiss Gold Trust ETF NYSEARCA: SGOLthe iShares Silver Trust NYSEARCA: SLVand quality precious metals miners and explorers. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it commitmdnt than from Seeking Alpha. I have no business relationship with any company whose stock is putlook in this article.

About the COT Report The COT report is issued by the CFTC every Friday to provide market participants a breakdown of each Tuesday's open cftc commitment of traders forex outlook for markets in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC. Disagree with this article? Follow Hebba Investments and get email alerts.




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