Tags: gold | rally | precious metal | insiders

Gold Rally Could Stall as Insiders Stop Buying

By    |   Wednesday, 19 Mar 2014 09:41 AM

Trading by insiders can offer important clues about value in the stock market. Insiders are the people who know the company the best.

In the stock market, they include high-ranking officers like the CEO and members of the board of directors. When they buy, they know something that leads them to believe the stock is undervalued. Their selling often indicates a stock is overvalued and they want to move their personal money into more appealing assets.

A similar analysis can be done with commodities. These markets are regulated by the Commodity Futures Trading Commission (CFTC) and rules that have been in place for many years require large traders to report their holdings every week. This data, known as the Commitment of Traders (COT) report, offers timely insight into what different groups are doing in the markets.

Insiders in the commodity markets are known as commercials. Miners are the commercials in the gold market. They know the market better than anyone and have a constant need to buy or sell in order to manage their inventory.

The latest COT report shows that miners are more bearish than they have been at any time in the past six months. Data also show that small investors, the ones who are more often than not wrong in the commodity markets, are bullish. In other words, the smart-money insiders are selling to the dumb-money small investors.

Gold could be in the early stages of a bull market but the uptrend in prices is likely to stall near current levels. At least that is what the insiders tell us and betting against them rarely pays off.

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MichaelCarr
Trading by insiders can offer important clues about value in the stock market. Insiders are the people who know the company the best.
gold,rally,precious metal,insiders
270
2014-41-19
Wednesday, 19 Mar 2014 09:41 AM
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