In a recent analysis by TDS commodity analyst Daniel Ghali, it was noted that while CTAs are ‘max long’ in Gold and Silver markets, the margin of safety against algorithmic liquidations in Gold remains high. This observation comes amidst a backdrop of geopolitical fears that may be preventing account holders from selling off their Gold positions despite extreme positioning measures.
Ghali pointed out that there is a lack of significant inflows into Gold in recent weeks, as indicated by positioning analytics. This suggests that the high prices of Gold are not necessarily due to increased buying activity, but rather a scarcity of sellers in the market. Money manager shorts are now mainly tied to EFPs, indicating that there are very few directional shorts left in the Gold markets.
Conversely, Silver prices have a smaller margin of safety against selling programs compared to Gold. However, there is potential for Silver and base metals to benefit from reflationary trends, making them a more favorable investment option in the current market environment. Ghali believes that Silver could outperform Gold if these reflationary trends continue.
Overall, the analysis highlights the unique dynamics at play in the Gold and Silver markets. While CTAs are heavily invested in these precious metals, the level of safety against liquidations differs between Gold and Silver. Investors may need to be cautious and closely monitor market trends to make informed decisions about their investment strategies. With geopolitical factors and reflationary trends influencing prices, the outlook for Gold and Silver remains uncertain in the near term.
