Commitment of Traders out today

Due to the Thanksgiving Holiday last week, the usual Friday release of the Commitment of Traders report from the CFTC was delayed until today, Monday.

Here are a couple of charts noting the latest data through Tuesday of LAST WEEK. It is a shame that we cannot get the data as soon as each day is completed but alas, things are what they are. I am especially interested in seeing whether or not the hedge fund category has gotten a bit more aggressive on their long liquidation than they did last week.

Notice that their reduction of longs was relatively modest by recent comparison but that they were quite aggressive in playing the short side of the gold market. See the huge spike upward in the red line?

Something else caught my interest. Notice the Commercial category ( Red line)which includes the Processer/User/Merchant(s). It is noted on the chart by the Ellipse. For the first time ever on this particular chart they are now NET LONG. That is a rather remarkable development. In and of itself, it does not mean all that much since it is speculative money flows that drive today's markets but it is noteworthy nonetheless. We'll watch this number as well as that of the Swap Dealers in subsequent reports to see if this new trend continues. My guess is that as gold moves lower and especially if it stays down near the cost of production for any significant length of time, we will see both Swap Dealers and this Commercial Category building more long side exposure to the gold market.

Based on the reported Deliveries so far this month at the Comex for the December gold contract, JP Morgan continues to be the largest stopper. Again, at the risk of overly repeating myself - it is speculators that drive markets, not commercials so the most important group to monitor will be these enormous hedge funds. While their overall net long position is very close to the same level is was earlier this summer when gold spiked to an $1180 low, they are still NET LONG this market and have not yet managed to move to an overall NET SHORT position.

In other words, strong physical buying of the metal MUST SURFACE almost immediately or these hedge funds are going to batter the metal even more as they are now following the lead of their computers and getting more aggressive towards the short side.