As a scholar of market historical past, I at all times discover it fascinating, and even generally
As a scholar of market historical past, I at all times discover it fascinating, and even generally fairly comical, how sure fallacies about markets are regularly propagated by buyers and analysts alike. All through my profession in writing about metals, I’ve tried to convey many of those to mild, and clarify why so most of the fallacies needs to be ignored.
The newest within the string of fallacies pertains to the Dedication of Merchants report (COT). The frequent argument means that so long as the business merchants are shorting gold closely, then gold can not rally. And, a lot has been made from late concerning the heavy business quick positions pointing to a significant drop within the gold market. But, historical past suggests in any other case.
In the event you have a look at the connected chart for the final 20 years, you will notice that throughout the parabolic rally of 2010-2011 within the price of gold the business merchants had been closely quick gold. In truth, you may see that in that total time frame, business shorts remained at 200,000 or higher. But, that was throughout a time frame the place the worth of gold rallied $800. For these counting in proportion phrases, meaning gold rallied 70%+ throughout a time…