Because Gold/Silver is a Currency not a commodity and Oil is
still viewed as a commodity. Gold/Silver have taken over from
the dollar as the "safe haven" investment.
One very interesting thing right now in Gold is that
both the Commercials and Non-Commercials are at roughly the same
levels (net short and net long, respectively) as they were just
prior to the crash (looking at July 2008 & current COT data).
So, theoretically, there is an equivalent amount of fuel for a
similar sell-off if liquidations force
sales in comparable numbers again. Of
course, the effect of the selling was over for gold by
Nov '08, when safe-haven buyers took over.
So the question is a key one: will the speculative component of
the current open interest in gold hold on or be forced out again if
real selling comes back?
I think we're a lot closer to the idea of gold as
protection against fiat currency devaluations, so maybe an even
shallower selloff would result; one that could be hedged, as
suggested elsewhere, with short GDX or, for the brave, short or
double short SLV.
It could be that the big increase in open interest in oil in
2008, much of it by funds/speculators, was just a
narrower version of what's happened in many more commodities since
2009 and especially in the past few quarters. In other words, the
outsized spike in oil then may be comparable to many more
big spikes now in metals, grains, cotton, oil, etc. There has
been steadily increasing participation across the whole
spectrum over the past two years, with pensions, hedge funds, etc.
all allocating more to the space. It's probably good to keep in
mind that correlations between equities and commodities were very
high in the crash. If risk trades come off again in a big
way, it will probably cut across the same classes
again. The $, Treasuries and Managed Futures were the winners.
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why is gold at new
Posted by admagazu on 1st of Mar 2011 at 04:38 pm
why is gold at new highs and crude oil still 30% below its high...?
Because Gold/Silver is a Currency
Posted by parrrich on 1st of Mar 2011 at 05:29 pm
Because Gold/Silver is a Currency not a commodity and Oil is still viewed as a commodity. Gold/Silver have taken over from the dollar as the "safe haven" investment.
That is a key question...
Posted by lessarda on 1st of Mar 2011 at 11:14 pm
One very interesting thing right now in Gold is that both the Commercials and Non-Commercials are at roughly the same levels (net short and net long, respectively) as they were just prior to the crash (looking at July 2008 & current COT data). So, theoretically, there is an equivalent amount of fuel for a similar sell-off if liquidations force sales in comparable numbers again. Of course, the effect of the selling was over for gold by Nov '08, when safe-haven buyers took over.
So the question is a key one: will the speculative component of the current open interest in gold hold on or be forced out again if real selling comes back?
I think we're a lot closer to the idea of gold as protection against fiat currency devaluations, so maybe an even shallower selloff would result; one that could be hedged, as suggested elsewhere, with short GDX or, for the brave, short or double short SLV.
looks like distribution on SLV
Posted by bkout3 on 3rd of Mar 2011 at 03:48 pm
looks like distribution on SLV chart -- divergence on OBV lines
what's more important is that
Posted by PA on 1st of Mar 2011 at 04:41 pm
what's more important is that gold and oil are going up together. It is very bullish for p.m.'s. Imagine gold more than 10x current price.....in $USD
crude should be at 200
Posted by admagazu on 1st of Mar 2011 at 04:44 pm
crude should be at 200 already the way i see things..the fact that its not is a red flag for gold and oil bulls
Possible adjustment for broadly increased speculative trading
Posted by lessarda on 1st of Mar 2011 at 05:09 pm
It could be that the big increase in open interest in oil in 2008, much of it by funds/speculators, was just a narrower version of what's happened in many more commodities since 2009 and especially in the past few quarters. In other words, the outsized spike in oil then may be comparable to many more big spikes now in metals, grains, cotton, oil, etc. There has been steadily increasing participation across the whole spectrum over the past two years, with pensions, hedge funds, etc. all allocating more to the space. It's probably good to keep in mind that correlations between equities and commodities were very high in the crash. If risk trades come off again in a big way, it will probably cut across the same classes again. The $, Treasuries and Managed Futures were the winners.