Quote of the day – “If you want to buy low and sell high, you have to get the first half right”

We present the JNUG chart which is a 3 times levered ETF on the gold mining juniors spectrum…

We have been attempting to carry out the first half of the quote in our headline above on this particular ETF last week what with the gold mining spectrum back once more into the “once in a generation” buying zone.

Together with the CoT data below, and which is actually a snapshot on Tues of last week, ie BEFORE the end week drubbing in silver and gold, my question the week before as to “who is left to sell” is even more prescient… 

We can see that in the gold futures market, the managed money category cut their longs dramatically and the producers moved back towards one of the lowest natural short positions for many years. In silver, the managed money were on the right side of Friday’s move as they moved net short by a similar amount of contracts to the beginning of the year. Of course when they were net short by this measure in early Jan, silver promptly moved from just $18.50 to near $23’s in a few weeks…

My guess is that the managed money group have now collectively put in a multi-year high short position by the end of last week. It will be interesting to see what next week begins but I relay the comment from my last piece on silver – “there is always the potential for another lurch lower just to really grind the bulls into the dirt – perhaps to $16/oz per the chart above. We will plan for such an eventuality here at Titan through selling puts on a downtick and keeping our position size appropriate in the outright silver commodity/related instrument like the USLV.” See here our reasoning as to why we believe thay we are presently rolling around a multi-year bottom in silver – http://www.spreadbetmagazine.com/blog/titan-with-silver-the-most-oversold-in-30-years-heres-why-we.html. 

The very fact that next to nobody is positioned for a move to the upside reaffirms my belief that one is imminent as the “market” is designed to collectively catch as many people out as possible. See table below from Kitco.com of industry participants expectations of price moves this week.

Clear disclosure – Richard Jennings and/or Titan funds are long JNUG and silver related ETF’s. This piece should not be taken as an advocation to buy (or sell) these instruments and you should always take independent financial advice in relation to your own circumstances.