Investing in Gold – Hedge Fund Bets

Gold Matrix is our endeavor to make sense of the wide-ranging array of factors that confronts anyone interested in .

Investing in Gold – Gold Investment Matrix

In this apparently short post, we feature Hedge Fund Bets – 1 Sep 2009 to 22 Jan 2013. These are popularly seen, by the press and newswires, as indicators to the direction of price of gold movements as hedge funds represent the best brains of the investment industry and by implication smart money who ordinary investors should follow.

Digging deeper into how the press obtains its hedge fund data on gold, we examined publicly available data at the website of US Commodity Futures Trading Commission.

Congress created the Commodity Futures Trading Commission (CFTC) in 1974 as an independent agency with the mandate to regulate commodity futures and option markets in the United States. The agency’s mandate has been renewed and expanded several times since then, most recently by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Today, the CFTC assures the economic utility of the futures markets by encouraging their competitiveness and efficiency, protecting market participants against fraud, manipulation, and abusive trading practices, and by ensuring the financial integrity of the clearing process. Through effective oversight, the CFTC enables the futures markets to serve the important function of providing a means for price discovery and offsetting price risk.

The CFTC’s mission is to protect market users and the public from fraud, manipulation, abusive practices and systemic risk related to derivatives that are subject to the Commodity Exchange Act, and to foster open, competitive, and financially sound markets.

At the above link, you will find data from today and dating as far back as 1 Jan 2005, where trading in options and futures of various commodities, including gold, are reported on a weekly basis. Gold is traded in 100 Troy Oz Contracts and reported as long contracts, short contracts and spreading contracts under 4 different categories:

1. Producer/Merchant/Processor/User

2. Swap Dealers

3. Managed Money

4. Other Reportables 

For an example, click on this 22 Jan 2013 report.

It seems weekly hedge fund bets are derived by assuming that the Managed Money numbers represent hedge funds and the net position number often touted in the press and newswires is simply taken as the long positions minus the short positions, with the spreading positions disregarded. Whether this is a true reflection of hedge fund bets, perhaps someone (with actual US gold options and futures trading experience) reading this can COMMENT below to enlighten everyone.

Following the above computation method, we have assembled the Table below from 1 Sep 2009 to 22 Jan 2013, the most current report. We did not go back before 1 Sep 2009 as the reporting format was not as detailed as the 4 categories above, and therefore would produce un-comparable numbers.

Hedge Fund Bets Denote Trading By Smart Money

Hedge Fund Bets				Per CFTC Database Classified as Managed Money
Date	Spot Gold Price	Weekly Contracts Increase/ (Decease)	Net Long Contracts	Long Contracts	Short Contracts	Spreading Contracts
	US$		(A) - (B)	(A)	(B)
12-Feb-13	1,647.50	(16,676)	70,250	119,403	49,153	33,497
5-Feb-13	1,673.50	4,845	86,926	121,755	34,829	32,120
29-Jan-13	1,663.50	(25,415)	82,081	116,948	34,867	27,830
22-Jan-13	1,690.50	8,038	107,496	127,938	20,442	44,956
15-Jan-13	1,680.50	7,343	99,458	123,533	24,075	38,689
8-Jan-13	1,656.00	(13,646)	92,115	120,191	28,076	36,021
31-Dec-12	1,657.50	3,839	105,761	130,258	24,497	27,279
24-Dec-12	1,651.50	(10,499)	101,922	128,155	26,233	37,509
18-Dec-12	1,694.00	(17,444)	112,421	132,662	20,241	36,803
11-Dec-12	1,710.00	3,792	129,865	142,494	12,629	34,571
4-Dec-12	1,697.75	(42,165)	126,073	141,467	15,394	29,996
27-Nov-12	1,746.25	19,608	168,238	175,521	7,283	30,544
20-Nov-12	1,732.25	8,468	148,630	158,505	9,875	44,910
13-Nov-12	1,726.25	10,034	140,162	151,579	11,417	44,660
6-Nov-12	1,691.00	(19,725)	130,128	141,531	11,403	48,186
30-Oct-12	1,710.00	(12,134)	149,853	161,492	11,639	40,461
23-Oct-12	1,711.00	(22,417)	161,987	171,484	9,497	44,130
16-Oct-12	1,746.50	(13,790)	184,404	191,980	7,576	42,748
9-Oct-12	1,774.00	2,547	198,194	204,810	6,616	44,546
2-Oct-12	1,775.50	5,777	195,647	202,186	6,539	41,725
25-Sep-12	1,771.50	11,444	189,870	194,985	5,115	43,378
18-Sep-12	1,769.50	12,702	178,426	185,298	6,872	46,150
11-Sep-12	1,736.75	20,949	165,724	171,870	6,146	41,702
4-Sep-12	1,697.00	13,088	144,775	155,717	10,942	33,601
28-Aug-12	1,668.00	21,064	131,687	144,705	13,018	29,361
21-Aug-12	1,639.50	28,567	110,623	128,128	17,505	27,412
14-Aug-12	1,597.75	(3,454)	82,056	109,187	27,131	25,568
7-Aug-12	1,611.00	(10,690)	85,510	110,650	25,140	24,069
31-Jul-12	1,622.00	25,071	96,200	118,837	22,637	26,090
24-Jul-12	1,583.25	(21,835)	71,129	103,695	32,566	29,517
17-Jul-12	1,585.25	3,991	92,964	120,939	27,975	25,101
10-Jul-12	1,595.25	(19,305)	88,973	124,456	35,483	24,946
3-Jul-12	1,617.50	(11,877)	108,278	136,268	27,990	26,780
26-Jun-12	1,576.00	15,509	84,161	120,155	35,994	24,834
19-Jun-12	1,625.50	4,962	104,646	131,120	26,474	32,282
12-Jun-12	1,603.50	1,258	99,684	132,726	33,042	32,383
5-Jun-12	1,606.00	21,101	98,426	134,207	35,781	33,236
29-May-12	1,579.50	7	77,325	119,117	41,792	30,186
22-May-12	1,582.50	(1,301)	77,318	116,460	39,142	37,684
15-May-12	1,556.50	(13,879)	78,619	112,676	34,057	32,165
8-May-12	1,602.50	(23,563)	92,498	115,878	23,380	27,280
1-May-12	1,664.00	8,461	116,061	126,625	10,564	24,704
24-Apr-12	1,649.50	(4,675)	107,600	119,768	12,168	23,101
17-Apr-12	1,635.50	2,764	112,275	121,993	9,718	25,352
10-Apr-12	1,644.00	(8,674)	109,511	124,479	14,968	25,357
3-Apr-12	1,676.25	(12,287)	118,185	131,544	13,359	17,503
27-Mar-12	1,692.00	17,188	130,472	142,430	11,958	17,958
20-Mar-12	1,656.75	(25,215)	113,284	130,396	17,112	27,222
13-Mar-12	1,690.00	(7,498)	138,499	151,297	12,798	27,473
6-Mar-12	1,669.00	(51,555)	145,997	157,407	11,410	27,916
28-Feb-12	1,781.00	18,420	197,552	205,525	7,973	30,542
21-Feb-12	1,748.00	16,176	179,132	187,996	8,864	27,221
14-Feb-12	1,722.00	(10,216)	162,956	171,383	8,427	23,381
7-Feb-12	1,724.00	13,663	173,172	179,384	6,212	25,577
31-Jan-12	1,744.00	32,572	159,509	165,702	6,193	22,525
24-Jan-12	1,665.50	9,959	126,937	138,142	11,205	20,151
17-Jan-12	1,656.00	6,479	116,978	129,904	12,926	24,360
10-Jan-12	1,637.00	(95)	110,499	126,619	16,120	21,518
3-Jan-12	1,598.00	(1,325)	110,594	128,430	17,836	21,614
27-Dec-11	1,606.50	(5,232)	111,919	126,992	15,073	19,757
20-Dec-11	1,613.50	(17,966)	117,151	131,086	13,935	26,408
13-Dec-11	1,672.50	(16,230)	135,117	145,554	10,437	23,932
6-Dec-11	1,708.00	5,049	151,347	159,210	7,863	21,561
29-Nov-11	1,717.00	(2,958)	146,298	154,120	7,822	19,223
22-Nov-11	1,699.00	(22,376)	149,256	158,327	9,071	20,240
15-Nov-11	1,785.00	4,604	171,632	180,024	8,392	30,103
8-Nov-11	1,795.00	18,749	167,028	174,089	7,061	33,335
1-Nov-11	1,699.00	9,433	148,279	157,392	9,113	29,730
25-Oct-11	1,656.00	11,157	138,846	152,470	13,624	33,338
18-Oct-11	1,631.00	(3,948)	127,689	139,993	12,304	31,839
11-Oct-11	1,663.00	4,388	131,637	143,718	12,081	31,949
4-Oct-11	1,638.00	(2,253)	127,249	142,320	15,071	31,649
27-Sep-11	1,659.00	(30,820)	129,502	144,046	14,544	38,392
20-Sep-11	1,799.00	(25,445)	160,322	168,642	8,320	51,612
13-Sep-11	1,820.00	(12,077)	185,767	192,080	6,313	51,249
6-Sep-11	1,895.00	2,472	197,844	202,824	4,980	58,134
30-Aug-11	1,825.00	(5,922)	195,372	201,447	6,075	49,125
23-Aug-11	1,876.00	(17,109)	201,294	213,109	11,815	58,926
16-Aug-11	1,782.50	(171)	218,403	228,713	10,310	52,874
9-Aug-11	1,736.00	(35,079)	218,574	227,174	8,600	43,958
2-Aug-11	1,637.75	20,397	253,653	259,002	5,349	30,011
26-Jul-11	1,612.75	(5,063)	233,256	237,247	3,991	30,798
19-Jul-11	1,601.00	16,135	238,319	243,363	5,044	38,514
12-Jul-11	1,550.50	44,393	222,184	228,630	6,446	23,035
5-Jul-11	1,510.00	(3,565)	177,791	183,054	5,263	27,157
28-Jun-11	1,499.00	(45,145)	181,356	187,203	5,847	25,696
21-Jun-11	1,544.75	22,681	226,501	230,545	4,044	24,735
14-Jun-11	1,516.00	(12,400)	203,820	208,836	5,016	24,413
7-Jun-11	1,545.00	9,426	216,220	219,432	3,212	25,357
31-May-11	1,536.50	8,279	206,794	212,360	5,566	23,960
24-May-11	1,527.00	13,130	198,515	207,327	8,812	40,940
17-May-11	1,478.50	(13,222)	185,385	190,135	4,750	32,838
10-May-11	1,513.50	(19,648)	198,607	204,903	6,296	30,940
3-May-11	1,540.25	(2,293)	218,255	222,216	3,961	34,234
26-Apr-11	1,497.50	(8,029)	220,548	224,168	3,620	24,564
19-Apr-11	1,490.50	17,482	228,577	231,621	3,044	24,213
12-Apr-11	1,450.50	(5,773)	211,095	216,201	5,106	21,851
5-Apr-11	1,433.50	17,556	216,868	222,483	5,615	18,036
29-Mar-11	1,417.50	10,110	199,312	201,651	2,339	21,313
22-Mar-11	1,426.00	5,294	189,202	192,838	3,636	29,872
15-Mar-11	1,400.50	(15,313)	183,908	194,037	10,129	30,126
8-Mar-11	1,426.25	(1,863)	199,221	206,489	7,268	24,530
1-Mar-11	1,420.75	18,345	201,084	210,620	9,536	24,444
22-Feb-11	1,401.00	22,925	182,739	194,563	11,824	26,347
15-Feb-11	1,372.75	13,968	159,814	172,360	12,546	19,087
8-Feb-11	1,363.50	21,052	145,846	164,435	18,589	18,205
1-Feb-11	1,331.50	(4,870)	124,794	149,663	24,869	19,350
25-Jan-11	1,324.00	(4,809)	129,664	160,167	30,503	23,995
16-Jan-11	1,360.50	(9,763)	134,473	162,160	27,687	77,921
11-Jan-11	1,374.00	(14,423)	144,236	164,366	20,130	76,497
4-Jan-11	1,388.50	(11,328)	158,659	175,122	16,463	65,859
28-Dec-10	1,373.50	8,832	169,987	182,556	12,569	69,388
21-Dec-10	1,383.00	(12,604)	161,155	175,209	14,054	69,569
14-Dec-10	1,394.50	(9,978)	173,759	185,171	11,412	77,903
7-Dec-10	1,420.00	1,021	183,737	194,057	10,320	79,669
30-Nov-10	1,383.50	5,447	182,716	192,714	9,998	78,802
23-Nov-10	1,377.50	4,202	177,269	191,170	13,901	84,668
16-Nov-10	1,349.00	(27,929)	173,067	187,763	14,696	103,017
9-Nov-10	1,421.00	(3,706)	200,996	215,781	14,785	109,267
2-Nov-10	1,351.00	(1,256)	204,702	219,020	14,318	88,186
26-Oct-10	1,329.50	(12,103)	205,958	216,125	10,167	86,289
19-Oct-10	1,339.00	(11,482)	218,061	227,826	9,765	92,630
12-Oct-10	1,348.50	4,269	229,543	237,943	8,400	69,220
5-Oct-10	1,330.50	(6,946)	225,274	232,406	7,132	71,519
28-Sep-10	1,294.00	9,092	232,220	238,044	5,824	71,286
21-Sep-10	1,275.00	(4,256)	223,128	228,026	4,898	70,067
14-Sep-10	1,265.50	8,486	227,384	234,008	6,624	69,686
7-Sep-10	1,256.75	2,633	218,898	224,342	5,444	67,507
31-Aug-10	1,246.00	13,794	216,265	222,518	6,253	64,594
24-Aug-10	1,222.00	20,195	202,471	208,460	5,989	62,414
17-Aug-10	1,226.00	21,154	182,276	188,039	5,763	63,633
10-Aug-10	1,192.50	2,703	161,122	171,806	10,684	59,636
3-Aug-10	1,187.50	4,038	158,419	171,429	13,010	56,694
27-Jul-10	1,168.00	1,668	154,381	168,540	14,159	66,672
20-Jul-10	1,183.00	(34,364)	152,713	174,379	21,666	61,815
13-Jul-10	1,216.00	(1,557)	187,077	194,904	7,827	55,561
6-Jul-10	1,195.00	(34,029)	188,634	200,009	11,375	55,757
29-Jun-10	1,234.50	(5,168)	222,663	227,944	5,281	60,891
22-Jun-10	1,236.00	10,115	227,831	231,253	3,422	58,636
15-Jun-10	1,225.00	(408)	217,716	220,704	2,988	52,203
8-Jun-10	1,246.00	5,709	218,124	222,539	4,415	54,632
1-Jun-10	1,227.75	1,387	212,415	216,349	3,934	53,938
25-May-10	1,198.25	(19,394)	211,028	216,386	5,358	61,140
18-May-10	1,216.75	3,227	230,422	234,181	3,759	60,100
11-May-10	1,222.50	13,056	227,195	233,803	6,608	58,173
4-May-10	1,185.00	3,438	214,139	221,508	7,369	58,772
27-Apr-10	1,149.50	12,950	210,701	216,063	5,362	56,767
20-Apr-10	1,144.75	(3,507)	197,751	202,279	4,528	61,437
13-Apr-10	1,148.25	22,875	201,258	205,120	3,862	63,676
6-Apr-10	1,132.75	28,984	178,383	185,616	7,233	63,161
30-Mar-10	1,107.00	(7,376)	149,399	157,723	8,324	58,472
23-Mar-10	1,101.50	(16,190)	156,775	165,927	9,152	74,028
16-Mar-10	1,124.75	(4,754)	172,965	179,677	6,712	74,813
9-Mar-10	1,115.75	(2,155)	177,719	182,721	5,002	64,212
2-Mar-10	1,126.50	12,194	179,874	185,798	5,924	65,228
23-Feb-10	1,107.00	8,372	167,680	174,352	6,672	58,537
16-Feb-10	1,115.25	3,685	159,308	169,899	10,591	61,047
9-Feb-10	1,071.25	(25,462)	155,623	169,333	13,710	58,086
2-Feb-10	1,111.00	4,929	181,085	189,560	8,475	56,313
26-Jan-10	1,093.25	(19,951)	176,156	184,073	7,917	55,887
19-Jan-10	1,133.00	1,762	196,107	204,120	8,013	70,274
12-Jan-10	1,151.25	(245)	194,345	205,311	10,966	65,723
5-Jan-10	1,123.25	(2,970)	194,590	201,286	6,696	58,148
29-Dec-09	1,106.00	(4,228)	197,560	203,584	6,024	51,428
22-Dec-09	1,084.00	(9,525)	201,788	207,168	5,380	53,921
15-Dec-09	1,122.00	(1,340)	211,313	215,204	3,891	48,518
08-Dec-09	1,146.75	(12,282)	212,653	216,761	4,108	49,647
01-Dec-09	1,192.50	(4,021)	224,935	232,099	7,164	42,095
24-Nov-09	1,163.25	(714)	228,956	233,039	4,083	40,519
17-Nov-09	1,134.75	(2,083)	229,670	233,504	3,834	57,906
09-Nov-09	1,106.75	(947)	231,753	235,180	3,427	61,968
03-Nov-09	1,061.00	12,788	232,700	236,967	4,267	59,837
27-Oct-09	1,036.50	(18,226)	219,912	221,910	1,998	53,486
20-Oct-09	1,061.75	(805)	238,138	240,792	2,654	52,062
13-Oct-09	1,057.50	18,557	238,943	241,446	2,503	46,192
06-Oct-09	1,038.75	18,871	220,386	223,948	3,562	42,477
29-Sep-09	989.50	(12,716)	201,515	202,842	1,327	39,870
22-Sep-09	1,014.00	391	214,231	215,058	827	43,773
15-Sep-09	996.00	15,372	213,840	214,661	821	43,992
08-Sep-09	993.00	42,709	198,468	201,961	3,493	43,025
01-Sep-09	NA	NA	155,759	160,821	5,062	36,526
25-Aug-09	NA	NA	NA	209,086	19,476	106,348

As the numbers are hard to interpret, we used MS Excel to display the relationship between the price of gold against the hedge fund bets to establish if a direct relationship can be observed. This is NOT a rigorous study of the relationship, which would require much more data and comparable log scales for the axis and data. However, a casual glance would seem to indicate some correlation between the price of gold and so-called smart money moves, at least from the latter part of 2011.

If you are not a hardcore gold bug, investing in goldis complicated by the many factors, macro and micro, that come into play. To make sense of it all, we are putting up a Gold Matrix comprising as many as, if not all, the relevant factors that influence the direction of the price of gold. As with all investment assets, there is no magic pill to solve all the possible complexities but we can all try to help one another. Please COMMENT below to share your personal insights and SHARE and LIKE so hat your friends can benefit too.