It looks like the smart money is going to be right again. And that's good news for anyone hoping to buy gold below $1,000 per ounce.
A couple weeks I ago, I told you commercial gold traders, otherwise known as "the smart money," had amassed
the largest short gold futures position of the past several years. In other words, they were betting on a decline in the price of the shiny yellow metal.
The Commitment of Traders report, issued last Friday and reflecting positions through last Tuesday, showed these traders are now even more bearish. The smart money short position is now a huge 320,000 contracts. Take a look...
The smart money is betting big on a drop in the price of gold. And they're now on the right side of the trade.
After peaking above $1,060 per ounce early last week, gold has tumbled almost $40 in just the past three days. Judging by the action in the gold stocks – which typically lead the price of the metal – there's lots more room to fall.
Take a look at this chart of GDX...
GDX is an exchange-traded fund of gold stocks. It has taken quite a beating over the past few days. In fact, at $41 per share, GDX is now all the way back to where was in May. Worse yet, the next real support level for GDX shares is down at about $38.
If the metal follows the action in gold stocks, patient buyers may have an opportunity to pick up some gold down around $925. That's about where it was the last time GDX was at $38.
Best regards and good trading,
Jeff Clark
