Today King World News is reporting on incredibly important developments taking place in the gold and silver markets. Acclaimed commodity trader Dan Norcini spoke with KWN about the action in both of these key markets and provided two tremendous charts. Below is what Norcini had to say in his interview.
Norcini has been stunningly accurate in his predictions of the movement in the gold and silver markets. Now the acclaimed trader discusses these incredibly important developments in both of these markets below:
Eric King: “I will hand it off to you on the COT (Commitment of Traders Report). Dan, you can give out the numbers there, but I told you I thought there was a 50,000 contract shift by the commercials (this week, which will be reported in next week’s COT report). So they should (now) be net long (gold) 30,000 to 35,000 contracts. I told you I thought it was (the year) 2001 since they had been long. You went and checked the history and indeed it was.”
Norcini: “Yes (the commercials were last long gold in 2001). We don’t have the detailed breakdown to data that far (back), that we do since they revised it going back to 2006, but nonetheless we can get a pretty good insight into who was positioned where.
Of course gold was in a bear market for 20 years before it was turning, but when you look at the positioning of speculators, they had been driving that market down. The funds were short and the commercials were long (back in 2001) (see chart below).
But what basically happened was the commercials were positioned on the long side of the gold market at the very bottom in November of 2001.
If you go back and look at a monthly chart (see below), it’s kind of interesting because that was the bottom (in 2001 when commercials were net long gold). From that moment on the gold market never (broke below) that low. Gold was trading around $274 an ounce and it never again went down to that level. That’s noteworthy.
Generally, Eric, I don’t like to make a big deal out of these COT reports because way too many people (attempt to) use them as some sort of “Holy Grail,” but I think at this point, because of the dramatic shift we’ve seen now, we are going to have to start paying attention to positioning of these traders from this point forward.
Based on this most recent (COT) report the hedge funds were still net longs in this (gold) market, and the commercials were still net short. But that did not cover Wednesday, Thursday or Friday’s activity. And as we know, that was huge volume on Thursday, some of the biggest volume we’ve seen in gold for a long, long time….
“There was a big change internally in this market and a huge shift in the composition of who was on what side (of the gold market). My suspicions are like yours. I would not be the least bit surprised when we see next Friday’s (COT) report, to see that maybe a 50,000 contract shift, from basically the commercials being net short 15,000, to perhaps being net long by 30,000 contracts, and the hedge funds (now being) on the net short side of this market.