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Gold/Mining/Energy : Precious and Base Metal Investing -- Ignore unavailable to you. Want to Upgrade?

To: jimsioi who wrote (17239)	8/19/2003 9:35:29 PM
From: Little Joe	Read Replies (1) \| Respond to of 39344

Jim: I just don't understand how you can look at those charts and give the commercials the time of day. The best you can say is that the last two times, prior to the current time. they went over 100K net short the market corrected and then resumed its uptrend. The charts clearly show a tendency to trade against the trend whether on a long term basis or a short term basis. The last time they went over 100K short seems to have coincided with a bottom and not a top. So what, in the face of their horrible record, should we conclude based on a few examples that suddenly this indicator works. By the way, I remember a similar discussion on this thread where the magic number was 60K net short and if you look back you will see that there were a few times when 60K did appear to turn the trend. The fact is it is that the current pattern, for whatever reason, is to short every rally until the market turns, then back off a little and start shorting again. Jim, you may be right about the price of gold, although I don't think so, but to use the COT's as the basis of your reasoning just flys in the face of the facts. At least that is how I see it. I think your charts show, if anything, that following the commercials is a good way to loose all of your money. Little joe

To: jimsioi who wrote (17239)	8/20/2003 7:03:43 AM
From: Louis V. Lambrecht	Read Replies (1) \| Respond to of 39344

jim & vt - I try to maintain my CoT database and pass some numbers into the charts. Don't know if they are usable as: - to the contrary of base metals where commercials are well defined (the miners, wholesalers, ...) and the indexes (MMs and specialists) I do not know who the commercials are for gold (miners or bullion banks, or both). - CoT on gold (Saville has a word on it) does not take into account the carry trades or some exotic contracts (forward sales with no deadline). CoT is also limited to CBOT and COMEX (wich is 20-25% of the London traded volume). Then, as usual with any data, raw numbers have IMVHO no meaning. Total open interest is no less than the translation of activity on a given commodity (but has to be distributed on some typical contracts. For example, currently the Dec gold makes 70% of the total O/I against 50% 3 weeks ago). Also thinking that a relative short position vs. total o/i could be indicative, but I also expect that one should neutralize a certain mass of contracts or constant. Then apply trendlines as it is the reversal of a trend that gives the signal. Then, there is maridome.com which now sells the contrarian data. To me, an analysis is valid until the herd starts using it. At that time, black-box what-if softwares will include that particular crowd behaviour into their parameters and trade against the crowd. So, when I will have quantified these several ideas in a model, I will be able to make an opinion. And base that opinion on data representing 20% of I don't know what. Will I really spend time on this? <ggg>