As we begin trading in the latter part of the first month of trading in 2018, stunning moves are being made in the gold, silver and bonds markets.
(King World News) – A portion of today’s note from legend Art Cashin: An Update From An Old Friend – My good pal, bond and mortgage maven Barry Habib has updated his view on the ten year Treasury note. Here’s what Barry wrote:
Moment of truth approaching for the 10-year, as it nears 2.635%. This level, which has kept a lid on yields for almost 4 years, is an important Fibonacci ceiling. This ceiling has held several times over the past 4 years, but if this barrier is pierced to the upside – look for the 10-year note to move up to 3.04% in relatively short order. I don’t think that many are prepared for this move.
King World News note: It is important to note that the commercials are still heavily long US 10-Year Treasuries (see 23-year chart below).
Commercials Heavily Long US 10-Year Treasuries
And look at what is happening with 5-Year US Treasuries (see stunning 23-year chart below).
Commercials Increase All-Time Record Long Positions In 5-Year US Treasuries!
What about gold and silver?
Recently, there have been significant fund flows into the gold ETF GLD (see chart below).
Money Flowing Into Gold ETF
But money has been flowing out of the Silver ETF (see chart below).
Money Flowing Out Of Silver ETF
Investors and professionals like to chase price performance. As the price of silver continues to rally, we will begin to see money aggressively flow into the silver ETF. Many are worried about the commercial buildup of short positions in the gold market. Here is what Bill Fleckenstein had to say in his Q&A:
Fleck: “Don’t borrow trouble. It may play out as you fear, or it may not. I’m not doing anything based on that data.”
The Bottom Line
The bottom line is that crude oil experienced a massive rally in the face of all-time record shorting by commercials. The same may be true for gold, so don’t try to get cute and time the market. Instead, simply continue to dollar cost average by buying physical gold and silver at the same time each month and holding for the long-term.