There are a growing number of articles that quote Hedge funds managers who claim to increase their exposure on gold.
On Monday, November 21st when gold sharply declined Bloomberg reported that Hedge Funds cut their bullish bets on many commodities due to the debt concerns in Europe, but the article also showed that Hedge funds also increased their net long position in gold. This trend in gold hoarding was confirmed again today with Bloomberg’s report that gold traders continue to be bullish on the precious metal.
The only problem is that this gold hoarding isn’t represented in the current gold price. During the past couple of weeks from November 11th until November 25th – gold price declined by 5%.
This could mean that despite the growing bullish bets of Hedge Funds in gold, their purchase power doesn’t keep up with the many traders who trade down gold.
On the other hand, if this gold hoarding will continue, it’s likely to eventually change the recent downward direction of gold and silver and help them rally.
For further reading:
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.