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Speculators Make Wrong Turn onto "Streets Paved with Gold"

Learn why another group of market participants are usually on the right side at key price turns

by Bob Stokes
Updated: October 17, 2019

The Commodity Futures Trading Commission follows the activity of three different groups of participants in the commodity markets: small traders, large traders and commercials.

A classic Elliott Wave Theorist provides insight as to why only one of these groups is usually right at key turns:

Small traders are typically on the wrong side of the market at the turns. You might think that large traders, because they have a lot more money, are right a lot, but they are likewise usually wrong at the turns. The commercials are the only participants in commodity markets who generally buy low and sell high.... Commercials are in the business of manufacturing, not speculating, so they think economically rather than financially. They do not perceive commodities as investment items, so they're not participating in the herd.

With that in mind, let's review our analysts' recent discussions of the price action of gold.

Let's start with this chart and commentary from our September Elliott Wave Financial Forecast, which published Aug. 30 [wave labels available to subscribers]:

GoldLgSm

As of last week, the Large Specs were net-long 349,647 gold futures and options, a record position dating back to 1995... At the same time, Commercials are record net-short 386,110 futures and options contracts. As the chart shows, these [are] new records... Spot gold pushed to $1554.96 this week. Prices remain in the target range discussed here and in The Elliott Wave Theorist. Gold will soon resume declining.

That's exactly what happened. Just six days later, the price of gold topped.

Review this chart from our Oct. 14 U.S. Short Term Update [wave labels available to subscribers]:

xagx101419

As you can see, gold climbed to $1557.29 on Sept. 4. But, by Oct. 1, the price had dropped to $1459 before bouncing somewhat higher and then reversing again.

Now is the time to find out what our analysts expect next for gold -- and silver.

You can get their complete analysis, which includes price targets, risk-free for 30 days. Look below to learn how you can have our latest gold and silver insights on your computer screen in just moments.

A Key Insight into the Price Action of Gold

This is straight from our September Elliott Wave Financial Forecast:

Gold fever can run at scorching hot levels in the late stages of a rally. The final phase of the advance to gold's peak in 2011 is an example, as the precious metal surged 19% in just over a month, from August 1, 2011 to the peak at $1921.50 on September 6, 2011.

Learn why this insight is relevant in 2019. You can do so risk-free.

Look below to find out how you can have our price targets for gold (and silver) on your computer screen instantly ...


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