Mar 31 2008
Not So Much Deleveraging in Gold
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I wrote last week in Did the Leverage Really Come out of Gold? about how lots of market commentators attributed deleveraging to the major drop in gold and other commodities about a week and a half ago. At that point I said if there really was a big reduction of leverage in gold, etc. it would show up in the Commitment of Traders data.
Well, that data through last Tuesday (March 25) is available and it does show a reduction in open interest. It fell from 489,000 contracts to 452,000 contracts, somewhat less than 10%. Personally, I wouldn’t call that a huge deleveraging. Sure, there were quite a few positions closed, but it’s not like there was a mass departure from the market and net positions didn’t drop by very much.
Sorry. I’m just not buying it, especially since the drop in Gold hasn’t continued.
Here are some other posts which might interest you:
- Did the Leverage Really Come out of Gold?
- Warning Sign: Open Interest Declining
- New NFP Futures Coming
- Tuesday Thinking and Things
- Aussie, Gold, and Stocks
