On 12 Jan 2011
Is this a gold bubble?,
Anyone who trades regularly may use the COT (Commitment of Traders) report each week to determine the direction of gold and silver.
This is like riding the coattails of the big speculators who tend to be right most of the time. The COT measures put vs. call volume for a wide variety of commodities.
The COT has shown that gold has been nothing but a long (up) trade for several months, with a high ratio of calls to puts for all precious metals, for large speculators specifically.
I receive this report in my inbox for free... visit http://www.commitmentsoftraders.com/
When the large speculators begin moving into more puts than calls, that's your sell signal.
Gold won't dump overnight as the central banks of China, India and Russia have been buying gold reserves for the last few years in a row. All of them are still underweighted in gold, based on their own reports. The Chinese middle class have been buying gold like crazy, as their government has directed citizens to begin making these purchases.