Gold Prices Continue to Surge

For the fifth consecutive day, gold prices have traded to higher pricing. But the real story is that gold has been gaining ground, now adding over $100 since trading to a low of 1125 per ounce in December of last year. The last time gold prices were this high was on November 11, just following the post-election selloff, which took gold prices over $200 lower. After trading to $1340 immediately following the presidential election results, the next seven weeks would be characterized by gold trading to a new low each week until mid-December when gold prices bottomed at roughly 1225. It has now been seven weeks since those lows were achieved. For six of those seven weeks, gold has traded to a new weekly high.

Quiet Accumulation

Professional money managers have been quietly accumulating gold positions. The last seven weeks have certainly got the attention of many professional traders. According to Friday’s CFTC’s COT report (Commitment of Traders), there has been a substantial increase of long positions initiated by professional money managers.

In an interview yesterday for Bloomberg News, Stan Druckenmiller mentioned that he has been buying gold after liquidating his long positions immediately following last year’s presidential election. He also revealed that he began to accumulate long gold positions in late December and January. It is quite interesting how he was able to liquidate long gold positions at the highest possible point, immediately following last year’s presidential election. And then, he was able to begin to accumulate long positions in gold precisely at the bottom in December.

The fact of the matter is that as far as money managers go, Stan Druckenmiller has one of the best long-term track records in the industry, making billions of dollars based on his incredible ability to read the markets. The fact that he was liquidating his long gold positions on the night of the election, and bought them back when the market bottomed a month later, illustrates his remarkable insight.

Buy When the Big Boys Buy

There are a handful of incredibly insightful investors that have accumulated huge amounts of wealth based on their ability to read markets. It seems that for the most part, they are currently bullish on gold.

Wishing you as always, good trading,