Uncle Ti 88

I read an article on the ASX website on the factors to consider when choosing which junior mining companies you want to put your money in. There are dozen of these companies and they seem to have lost their lustre due to the China slowdown and this dampens the commodities boom. Here are some of the factors to look out for: 1) What are the kind of commodities the company is mining? eg. gold, uranium, copper, diamonds 2) Where are the projects? eg. Australia, in a volatile African country 3) Are the projects on a big scale? 4) Who is the managing director? 5) How much cash does the company has? These junior mining companies do look attractive given success stories such Paladin Energy Ltd (ASX : PDN). Imagine a share worth a couple of cents going up to $10.00. But do take note that these type of successes are not that common.  

Gold Disaggregated Commitments of Traders Report 12 June 2012 It is said gold traders have been bullish for the past few weeks. According to the World Gold Council, central banks are buying more gold after adding 456.4 tonne in 2011, the most in almost five decades. Above is the chart for the Disaggregated Commitments of Traders for Gold. The smart money (the Producers and Swap Dealers) have been unwinding their short positions steadily. This could mean there might be a drop in gold prices and the end of the bullish run for gold.

Commitment of Traders Report COT CFTC - Gold - Commodity Exchange Inc - 20 March 2012 Gold has been range-bound after hitting the top. Commercials are still net short, only about 30% of them are taking long positions. However the numbers taking long positions are increasing compared to previous weeks.

Commitment of Traders Report COT CFTC - Gold - Commodity Exchange Inc - 13 December 2011 The commercial traders have reduced their net short position in the last few weeks. Look at the gold chart below for XAU/USD. If the trend continues we can expect the price to go down further. Is it just a minor correction or the end of the bull market for gold? Well, we will just follow the commercials for now. Gold XAUUSD Chart December 2011

Commitments of Traders COT CFTC - Gold Where is gold heading? Through the roof! There is no let up by both the commercials and speculators since 2002!

SPDR S&P China - NYSE Want to know where the market in China is heading? The commercials aka " big boys" have been shorting the ETF since April 2011! Now the question is whether the selling will still go on or the price will rebound back-up... according to COT Proxy looks like the commercials are still shorting it... who will you follow? The commercials - "smart money" or  "dumb money"?

The graph below shows the relationship between the commercials and the large speculators. They go the opposite don't they? When the commercials are long, the speculators are short and vice versa. Gold - Commitments of Traders Chart The commercials (producers) are producing and selling (short) and the speculators are buying (long) since 2002! Look where the price of gold is now. Even though the price has fallen in the last few weeks, the percentage remains the same. From here you can expect the price of gold to go higher! The sell-off is nothing but consolidation! People have been saying to sell gold now but that is not what the Commitments of Traders chart is telling us. It tells us to buy, buy, buy! On a side note, if you don't know how to invest in gold and don't want to hold onto physical gold, you can look at the SPDR Gold ETF. In Singapore, it is traded like a stock on the Singapore Stock Exchange (SGX).

How do you make sense of it all, with all the numbers? COT Report Exported to MS Access To make it easy for me to interpret the data, I exported the raw COT report into MS Access which allows for easy filing, retrieval and manipulation. Please see the screenshot above for what I have done. It is easy to sort by year, by the commodity, by the exchanges, etc. It is also advisable that you know basic SQL language so that you can play around with the data.