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 .Hedge Fund Bets

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
 
 
DateSpot Gold PriceWeekly
Contracts
Increase/
(Decease)
Net Long
Contracts

Long
Contracts
Short
Contracts
Spreading
Contracts
US$(A) - (B)(A)(B)
12-Feb-131,647.50(16,676)70,250119,40349,15333,497
5-Feb-131,673.504,84586,926121,75534,82932,120
29-Jan-131,663.50(25,415)82,081116,94834,86727,830
22-Jan-131,690.50 8,038 107,496127,93820,44244,956
15-Jan-131,680.50 7,343 99,458123,53324,07538,689
8-Jan-131,656.00 (13,646)92,115120,19128,07636,021
31-Dec-121,657.50 3,839 105,761130,25824,49727,279
24-Dec-121,651.50 (10,499)101,922128,15526,23337,509
18-Dec-121,694.00 (17,444)112,421132,66220,24136,803
11-Dec-121,710.00 3,792 129,865142,49412,62934,571
4-Dec-121,697.75 (42,165)126,073141,46715,39429,996
27-Nov-121,746.25 19,608 168,238175,5217,28330,544
20-Nov-121,732.25 8,468 148,630158,5059,87544,910
13-Nov-121,726.25 10,034 140,162151,57911,41744,660
6-Nov-121,691.00 (19,725)130,128141,53111,40348,186
30-Oct-121,710.00 (12,134)149,853161,49211,63940,461
23-Oct-121,711.00 (22,417)161,987171,4849,49744,130
16-Oct-121,746.50 (13,790)184,404191,9807,57642,748
9-Oct-121,774.00 2,547 198,194204,8106,61644,546
2-Oct-121,775.50 5,777 195,647202,1866,53941,725
25-Sep-121,771.50 11,444 189,870194,9855,11543,378
18-Sep-121,769.50 12,702 178,426185,2986,87246,150
11-Sep-121,736.75 20,949 165,724171,8706,14641,702
4-Sep-121,697.00 13,088 144,775155,71710,94233,601
28-Aug-121,668.00 21,064 131,687144,70513,01829,361
21-Aug-121,639.50 28,567 110,623128,12817,50527,412
14-Aug-121,597.75 (3,454)82,056109,18727,13125,568
7-Aug-121,611.00 (10,690)85,510110,65025,14024,069
31-Jul-121,622.00 25,071 96,200118,83722,63726,090
24-Jul-121,583.25 (21,835)71,129103,69532,56629,517
17-Jul-121,585.25 3,991 92,964120,93927,97525,101
10-Jul-121,595.25 (19,305)88,973124,45635,48324,946
3-Jul-121,617.50 (11,877)108,278136,26827,99026,780
26-Jun-121,576.00 15,509 84,161120,15535,99424,834
19-Jun-121,625.50 4,962 104,646131,12026,47432,282
12-Jun-121,603.50 1,258 99,684132,72633,04232,383
5-Jun-121,606.00 21,101 98,426134,20735,78133,236
29-May-121,579.50777,325119,11741,79230,186
22-May-121,582.50 (1,301)77,318116,46039,14237,684
15-May-121,556.50 (13,879)78,619112,67634,05732,165
8-May-121,602.50 (23,563)92,498115,87823,38027,280
1-May-121,664.00 8,461 116,061126,62510,56424,704
24-Apr-121,649.50 (4,675)107,600119,76812,16823,101
17-Apr-121,635.50 2,764 112,275121,9939,71825,352
10-Apr-121,644.00 (8,674)109,511124,47914,96825,357
3-Apr-121,676.25 (12,287)118,185131,54413,35917,503
27-Mar-121,692.00 17,188 130,472142,43011,95817,958
20-Mar-121,656.75 (25,215)113,284130,39617,11227,222
13-Mar-121,690.00 (7,498)138,499151,29712,79827,473
6-Mar-121,669.00 (51,555)145,997157,40711,41027,916
28-Feb-121,781.00 18,420 197,552205,5257,97330,542
21-Feb-121,748.00 16,176 179,132187,9968,86427,221
14-Feb-121,722.00 (10,216)162,956171,3838,42723,381
7-Feb-121,724.00 13,663 173,172179,3846,21225,577
31-Jan-121,744.00 32,572 159,509165,7026,19322,525
24-Jan-121,665.50 9,959 126,937138,14211,20520,151
17-Jan-121,656.00 6,479 116,978129,90412,92624,360
10-Jan-121,637.00(95)110,499126,61916,12021,518
3-Jan-121,598.00 (1,325)110,594128,43017,83621,614
27-Dec-111,606.50 (5,232)111,919126,99215,07319,757
20-Dec-111,613.50 (17,966)117,151131,08613,93526,408
13-Dec-111,672.50 (16,230)135,117145,55410,43723,932
6-Dec-111,708.00 5,049 151,347159,2107,86321,561
29-Nov-111,717.00 (2,958)146,298154,1207,82219,223
22-Nov-111,699.00 (22,376)149,256158,3279,07120,240
15-Nov-111,785.00 4,604 171,632180,0248,39230,103
8-Nov-111,795.00 18,749 167,028174,0897,06133,335
1-Nov-111,699.00 9,433 148,279157,3929,11329,730
25-Oct-111,656.00 11,157 138,846152,47013,62433,338
18-Oct-111,631.00 (3,948)127,689139,99312,30431,839
11-Oct-111,663.00 4,388 131,637143,71812,08131,949
4-Oct-111,638.00 (2,253)127,249142,32015,07131,649
27-Sep-111,659.00 (30,820)129,502144,04614,54438,392
20-Sep-111,799.00 (25,445)160,322168,6428,32051,612
13-Sep-111,820.00 (12,077)185,767192,0806,31351,249
6-Sep-111,895.00 2,472 197,844202,8244,98058,134
30-Aug-111,825.00 (5,922)195,372201,4476,07549,125
23-Aug-111,876.00 (17,109)201,294213,10911,81558,926
16-Aug-111,782.50(171)218,403228,71310,31052,874
9-Aug-111,736.00 (35,079)218,574227,1748,60043,958
2-Aug-111,637.75 20,397 253,653259,0025,34930,011
26-Jul-111,612.75 (5,063)233,256237,2473,99130,798
19-Jul-111,601.00 16,135 238,319243,3635,04438,514
12-Jul-111,550.50 44,393 222,184228,6306,44623,035
5-Jul-111,510.00 (3,565)177,791183,0545,26327,157
28-Jun-111,499.00 (45,145)181,356187,2035,84725,696
21-Jun-111,544.75 22,681 226,501230,5454,04424,735
14-Jun-111,516.00 (12,400)203,820208,8365,01624,413
7-Jun-111,545.00 9,426 216,220219,4323,21225,357
31-May-111,536.50 8,279 206,794212,3605,56623,960
24-May-111,527.00 13,130 198,515207,3278,81240,940
17-May-111,478.50 (13,222)185,385190,1354,75032,838
10-May-111,513.50 (19,648)198,607204,9036,29630,940
3-May-111,540.25 (2,293)218,255222,2163,96134,234
26-Apr-111,497.50 (8,029)220,548224,1683,62024,564
19-Apr-111,490.50 17,482 228,577231,6213,04424,213
12-Apr-111,450.50 (5,773)211,095216,2015,10621,851
5-Apr-111,433.50 17,556 216,868222,4835,61518,036
29-Mar-111,417.50 10,110 199,312201,6512,33921,313
22-Mar-111,426.00 5,294 189,202192,8383,63629,872
15-Mar-111,400.50 (15,313)183,908194,03710,12930,126
8-Mar-111,426.25 (1,863)199,221206,4897,26824,530
1-Mar-111,420.75 18,345 201,084210,6209,53624,444
22-Feb-111,401.00 22,925 182,739194,56311,82426,347
15-Feb-111,372.75 13,968 159,814172,36012,54619,087
8-Feb-111,363.50 21,052 145,846164,43518,58918,205
1-Feb-111,331.50 (4,870)124,794149,66324,86919,350
25-Jan-111,324.00 (4,809)129,664160,16730,50323,995
16-Jan-111,360.50 (9,763)134,473162,16027,68777,921
11-Jan-111,374.00 (14,423)144,236164,36620,13076,497
4-Jan-111,388.50 (11,328)158,659175,12216,46365,859
28-Dec-101,373.50 8,832 169,987182,55612,56969,388
21-Dec-101,383.00 (12,604)161,155175,20914,05469,569
14-Dec-101,394.50 (9,978)173,759185,17111,41277,903
7-Dec-101,420.00 1,021 183,737194,05710,32079,669
30-Nov-101,383.50 5,447 182,716192,7149,99878,802
23-Nov-101,377.50 4,202 177,269191,17013,90184,668
16-Nov-101,349.00 (27,929)173,067187,76314,696103,017
9-Nov-101,421.00 (3,706)200,996215,78114,785109,267
2-Nov-101,351.00 (1,256)204,702219,02014,31888,186
26-Oct-101,329.50 (12,103)205,958216,12510,16786,289
19-Oct-101,339.00 (11,482)218,061227,8269,76592,630
12-Oct-101,348.50 4,269 229,543237,9438,40069,220
5-Oct-101,330.50 (6,946)225,274232,4067,13271,519
28-Sep-101,294.00 9,092 232,220238,0445,82471,286
21-Sep-101,275.00 (4,256)223,128228,0264,89870,067
14-Sep-101,265.50 8,486 227,384234,0086,62469,686
7-Sep-101,256.75 2,633 218,898224,3425,44467,507
31-Aug-101,246.00 13,794 216,265222,5186,25364,594
24-Aug-101,222.00 20,195 202,471208,4605,98962,414
17-Aug-101,226.00 21,154 182,276188,0395,76363,633
10-Aug-101,192.50 2,703 161,122171,80610,68459,636
3-Aug-101,187.50 4,038 158,419171,42913,01056,694
27-Jul-101,168.00 1,668 154,381168,54014,15966,672
20-Jul-101,183.00 (34,364)152,713174,37921,66661,815
13-Jul-101,216.00 (1,557)187,077194,9047,82755,561
6-Jul-101,195.00 (34,029)188,634200,00911,37555,757
29-Jun-101,234.50 (5,168)222,663227,9445,28160,891
22-Jun-101,236.00 10,115 227,831231,2533,42258,636
15-Jun-101,225.00(408)217,716220,7042,98852,203
8-Jun-101,246.00 5,709 218,124222,5394,41554,632
1-Jun-101,227.75 1,387 212,415216,3493,93453,938
25-May-101,198.25 (19,394)211,028216,3865,35861,140
18-May-101,216.75 3,227 230,422234,1813,75960,100
11-May-101,222.50 13,056 227,195233,8036,60858,173
4-May-101,185.00 3,438 214,139221,5087,36958,772
27-Apr-101,149.50 12,950 210,701216,0635,36256,767
20-Apr-101,144.75 (3,507)197,751202,2794,52861,437
13-Apr-101,148.25 22,875 201,258205,1203,86263,676
6-Apr-101,132.75 28,984 178,383185,6167,23363,161
30-Mar-101,107.00 (7,376)149,399157,7238,32458,472
23-Mar-101,101.50 (16,190)156,775165,9279,15274,028
16-Mar-101,124.75 (4,754)172,965179,6776,71274,813
9-Mar-101,115.75 (2,155)177,719182,7215,00264,212
2-Mar-101,126.50 12,194 179,874185,7985,92465,228
23-Feb-101,107.00 8,372 167,680174,3526,67258,537
16-Feb-101,115.25 3,685 159,308169,89910,59161,047
9-Feb-101,071.25 (25,462)155,623169,33313,71058,086
2-Feb-101,111.00 4,929 181,085189,5608,47556,313
26-Jan-101,093.25 (19,951)176,156184,0737,91755,887
19-Jan-101,133.00 1,762 196,107204,1208,01370,274
12-Jan-101,151.25(245)194,345205,31110,96665,723
5-Jan-101,123.25 (2,970)194,590201,2866,69658,148
29-Dec-091,106.00 (4,228)197,560203,5846,02451,428
22-Dec-091,084.00 (9,525)201,788207,1685,38053,921
15-Dec-091,122.00 (1,340)211,313215,2043,89148,518
08-Dec-091,146.75 (12,282)212,653216,7614,10849,647
01-Dec-091,192.50 (4,021)224,935232,0997,16442,095
24-Nov-091,163.25(714)228,956233,0394,08340,519
17-Nov-091,134.75 (2,083)229,670233,5043,83457,906
09-Nov-091,106.75(947)231,753235,1803,42761,968
03-Nov-091,061.00 12,788 232,700236,9674,26759,837
27-Oct-091,036.50 (18,226)219,912221,9101,99853,486
20-Oct-091,061.75(805)238,138240,7922,65452,062
13-Oct-091,057.50 18,557 238,943241,4462,50346,192
06-Oct-091,038.75 18,871 220,386223,9483,56242,477
29-Sep-09989.50 (12,716)201,515202,8421,32739,870
22-Sep-091,014.00391214,231215,05882743,773
15-Sep-09996.00 15,372 213,840214,66182143,992
08-Sep-09993.00 42,709 198,468201,9613,49343,025
01-Sep-09NANA155,759160,8215,06236,526
25-Aug-09NANANA209,08619,476106,348

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.

Hedge Fund Bets

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. 

 

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