Hedge Funds Getting Bullish on Gold / Commodities / Gold and Silver 2021

The gold market has seenmany momentum shifts in recent months. At the end of the day, however, themarket really depends on one simple factor: Are the big money inflows trendingin a bullish or bearish direction?

Near market lows,speculative interest tends to be heavily on the short (bearish) side. That setsthe stage for buying pressure to be released when rallies force short sellersto cover their positions.

As traders shift to takingon more long (bullish) positions, momentum builds for higher prices.

Recent data suggests thathedge funds and large market participants are again ramping up their bullishgold positioning and that could take the yellow metal to previous all-timehighs… or beyond.

Hedge funds have increasedtheir bullish bets on gold and do not appear to be afraid of recent talk ofFederal Reserve tightening sooner than expected.

Latest data from theCommodity Futures Trading Commission (CFTC) shows that hedge funds increasedtheir speculative net long positions in gold by over 10,000 contracts.

Billionaire hedge fundmanager Ray Dalio has taken out a sizeable stake in gold, declaring “cash istrash.”

Dalio has also beendabbling in cryptocurrencies. But rival billionairehedge fund manager Paul Singer calls them “ridiculous,” preferring instead toown tangible alternatives to cash, including gold.

Guggenheim's CIO ScottMinerdi is eyeing an ultimate price target between $5,000 and $10,000 perounce. “As money leaves crypto and people are still looking for inflationhedges, gold and silver are going to be muchbetter places to go,” he said recently.

Of course, there arenumerous reasons why hedge funds and other big players may want to get theirhands on gold bullion. Rising inflation worries, easy monetary policies, and aweaker dollar to name a few.

With the stock marketpossibly at or near its high, the buying in gold has not been limited to U.S.market participants.

Players in other nationshave many of the same concerns, and those concerns may keep gold well supportedas it approaches its previous all-time highs.

According to IPE.com, amajor Swiss pension fund has also traded in its hedge fund and raw materialsholdings for gold.

This trend looks likely tocontinue, especially if precious metals markets continue to float higher.

Against the currentbackdrop of rising price pressures and a Fed that is willing to let inflationrun hot for a long time, institutional interest in gold is likely to increasefurther.

Gold started the yeararound $1,918 per ounce, and a move back above that price could triggeradditional buying and momentum upward, according to Blue Line Futures ChiefMarket Strategist Philip Streible.

The gold market tends toswing based on institutional trading momentum. As the yellow metal demonstratesstrength, the amount of longs and size of long positions tends to rise.

The opposite is true forwhen the metal shows weakness.

The current environment ingold suggests much further upside potential ahead.

Concerns over inflation,central bank policies, and currency weakness may all play a key role in gold’srise. Additionally, a stock market reversal or period of risk-off trade coulditself fuel further buying.

With little to no chartresistance above the market at current levels, the ascent in gold could besteep and could happen quickly. Once the train leaves the station, gold prices may not return to currentlevels ever again.

Stefan Gleason isPresident of Money Metals Exchange, the national precious metals company named 2015"Dealer of the Year" in the United States by an independent globalratings group. A graduate of the University of Florida, Gleason is a seasonedbusiness leader, investor, political strategist, and grassroots activist.Gleason has frequently appeared on national television networks such as CNN, FoxNews,and CNBC, and his writings have appeared in hundreds of publications such asthe Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2021 Stefan Gleason - All Rights Reserved

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