Gold speculators are currently about as long gold futures as I have ever seen them. At first, I thought this would be bearish and would probably limit any upside in gold in the near-term. But after a little research, I found an interesting analog. See the chart above. Back in 2005 (around the end of September) gold speculators (white line) made a massive bet on gold (red line). They went net long over 200,000 gold futures contracts shortly before gold ripped from $450 to $700+. Talk about smart money!
The $450 level in 2005 was very similar to today's $750 level. I think we could see a similar run in gold once we break through $750 that takes us over $1,000 gold in the next six months.
I've got you under my skin.mp3. http://kilby.sac.on.ca/faculty/dfinlay/Jazz%20Page%20Tunes/FrankSinatra-Under%20My%20Skin.mp3
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