Apologies for the lack of updates on the blog and a delay in the release of the new newsletter. The truth is, I caught a slight flu which did not affect me much at all, until my tooth started to become affected. At that point in time, I started to get serve pain (something that I have not experienced before). Pain killer did not help at all for days (trust me I took and tried almost all of them), until antibiotics kicked in. I didn't really sleep well at all for days, and it was an extremely difficultly to eat and drink too. I am only coming back to life now. What a crazy weekend, it definitely beats having a wild weekend with my mates around town chasing girls and having a few drinks hahaha.
Anyway, let us get back to business. Short update this week, only focusing on currencies and PMs, until next week. I know investors are closely following this story, and also my ongoing prediction of a Chinese hard landing in the property sector too. There is a lot of talk of precious metals bull market being done and dusted...nonsense! Don't let these clowns fool you, all great bull markets end in a bubble and so will this one. There are huge gains going to be made from the current oversold levels in both Gold and Silver. I have not bought yet but I will buy some next week (end of quarter I receive new inflows into the fund). In the meantime enjoy the short post!
Currencies
Chart 1: Hedge funds have quickly reversed their bullish bets on USD!
- Latest currency commitment of traders exposure towards the US Dollar has dramatically decreased from previous record setting run. Cumulative Dollar positioning now stands just slightly above $14 billion, which is a dramatic fall of bets from $43 billion seen few weeks ago.
- A lot of the currencies have come back into favour with hedge funds including the Euro and the Franc, where net long positions are now held. However, the same cannot be said about the commodity currency complex and especially the Aussie Dollar. The chart above shows that hedge funds and other speculators hold record bearish bets. Regular readers of this blog should remember that I shorted the Aussie Dollar back in November and December of 2012, as hedge funds held record net long bets. I am now contemplating covering my short bets. I am also contemplating closing my Apple short which I opened in August 2012 at $680. Haven't sold either yet.
- Currency Public Opinion survey readings on the US Dollar are definitely mean reverting to neutral levels. At the same time, Public Opinion on the foreign currencies have also risen from extreme negative levels. This is to be expected after such a violent Dollar sell off, but what we saw last week was a strong rebound. Which such crazy volatility, it is difficult to determinate a trend right now.
- Alternative currency commitment of traders report showed hedge funds and other speculators still remain extremely underexposed towards the precious metals sector. Hedge fund positions on Gold remain at very low levels of 43.7 thousand bullish contracts, while in Silver positioning are at some of the lowest ever at only 3,900 contract level. Hedge fund positions on Gold are the lowest since 2005 and small speculators the lowest since 2001. In Silver the overall bets are the lowest in at least 20 years! Twenty years ago I was a little kid playing with wooden swords at my garden parents village and I knew nothing about Gold or Silver, so trust me when I say this: we are now at a lifetime buying opportunity (at least in my lifetime haha)!
- Once again Gold and Silver gross short positions have reached record levels. Investors everywhere truly hate these assets and are selling them down hard and fast with a view that there is no need to hold Gold or Silver in the portfolio due to no potential for inflation.
- Public opinion on alternative currencies like Gold and Silver continues to remains depressed, confirming the COT reports and charts seen above. Outright bearishness and despair remain the correct phrases to be used when describing this sector... a perfect condition for a contrarian investor.