I hate crowded trades. They scare the bejeezus out of me. And although I am a big long term precious metal bull, I am tempted to get cute and try to fade the massive speculation that has engulfed gold and especially silver.
Have a look at the net speculative positioning in the COMEX silver market:
Specs are through the roof long! Now, I know gold specs are also massively long, but silver seems especially frothy.
I understand why gold bulls might be willing to push their luck. Over the past three decades, September has been the best performing month for gold.
But here is where the opportunity might lie. Although September has been an “up” month for silver, it ranks much more in the middle of the pack.
In the spring, the gold silver ratio had been hitting new highs, ticking as high as 83. But silver’s massive rip higher has pushed this ratio all the way back down to under 70.
I am too chicken to give away my long precious metals position, but I am willing to err towards owning more gold in here as a way to play “defense.” I am in essence getting long the gold/silver ratio, looking for a move back up to 75 in the coming month or two.
Thanks for reading,
I will be unable to write for the next couple of days. The MacroTourist will return on Monday September 19th. Take care