Good News for Gold Buyers

Good News for Gold Buyers
By Jeff Clark
October 29, 2009

It looks like the smart money is going to be right again. And that's good news for anyone hoping to buy gold below $1,000 per ounce.

A couple weeks I ago, I told you commercial gold traders, otherwise known as "the smart money," had amassed the largest short gold futures position of the past several years. In other words, they were betting on a decline in the price of the shiny yellow metal.

The Commitment of Traders report, issued last Friday and reflecting positions through last Tuesday, showed these traders are now even more bearish. The smart money short position is now a huge 320,000 contracts. Take a look...

The smart money is betting big on a drop in the price of gold. And they're now on the right side of the trade.

After peaking above $1,060 per ounce early last week, gold has tumbled almost $40 in just the past three days. Judging by the action in the gold stocks – which typically lead the price of the metal – there's lots more room to fall.

Take a look at this chart of GDX...

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GDX is an exchange-traded fund of gold stocks. It has taken quite a beating over the past few days. In fact, at $41 per share, GDX is now all the way back to where was in May. Worse yet, the next real support level for GDX shares is down at about $38.

If the metal follows the action in gold stocks, patient buyers may have an opportunity to pick up some gold down around $925. That's about where it was the last time GDX was at $38.

Best regards and good trading,

Jeff Clark

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	Last	Change	52-Wk
S&P 500	1097.91	+0.94%	+16.73%
Oil (USO)	40.76	+0.77%	-31.35%
Gold (GLD)	104.23	+1.02%	+35.00%
Silver (SLV)	14.44	+1.51%	+88.95%
U.S. Dollar	75.28	-0.01%	-9.39%
Euro	1.50	+0.11%	+12.20%
VIX	21.49	+0.28%	-69.44%
HUI	448.69	+0.60%	+120.38%
10-Year Yield	3.40%	-0.02	-0.47

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Company	Sym	Industry
NeuStar	NSR	telecom
Peet's Coffee	PEET	coffee
Cascade Micro	CSCD	electronics
Visa	V	credit
WABCO	WBC	auto parts
Quantum	QTM	data storage
Collectors Universe	CLCT	collectibles
Nalco	NLC	synthetics
Inergy Holdings	NRGP	gas distribution
Star Gas Partners	SGU	gas distribution
Edwards	EW	medical devices
Patni Computer	PTI	outsourcing
Super Micro	SMCI	networks
Armstrong	AWI	flooring
Acadia Realty	AKR	property mgmt
Barrett Business	BBSI	outsourcing
Crane	CR	conglomerate
NutriSystem	NTRI	weight loss
LJ International	JADE	sporting goods
Parametric Tech	PMTC	software
AngioDynamics	ANGO	medical devices
China Tech	CTDC	outsourcing

Company	Sym	Industry
AGA Medical	AGAM	medical devices
Cumberland	CPIX	pharma
Hampton Roads	HMPR	bank
Synovus	SNV	bank
First Busey	BUSE	bank
American River	AMRB	bank
Shanda Games	GAME	online games
Omeros	OMER	pharma
Leap Wireless	LEAP	wireless telecom
Celldex	CLDX	biotech
Avago Tech	AVGO	semiconductors
RailAmerica	RA	railroads
Array BioPharma	ARRY	medical research
Myriad Genetics	MYGN	biotech
Bank Mutual	BKMU	bank
Star Scientific	STSI	cigarettes
MetroPCS	PCS	wireless telecom
Mistras Group	MG	outsourcing
Raser Tech	RZ	electrical equip

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