Now it seems the whole world is watching the Euro's weakest link, Greece. When, not if, it defaults, will it take down Euro banks, governments....? When they fall into the Atlantic, will the ensuing tsunami submerge our own shores...?
Which financial phenomenon will play the role of Grim Financial Reaper, Deflation or Inflation? Or will we continue to soldier on, wobble on, in the uneasy equilibrium beyond these two cosmic forces?
And what of gold?
Of the long term, we confess we don't know, save for the famous words of one noted economist, that in the long term, we'll all dead (fairly obvious, but J. M. Keynes surely got a lot of quotes out of it.)
Short term? OPTION WIZARD TRADING METHOD GOLD is signaling that a short term bottom might be in via a precipitous drop to below 200,000 contracts in commercial net short positions as follows.
| Gold | Change | Date | COMMERCIALS NET SHORT |
| 1624.80 | -22.20 | 9/30/11 | 166,683 |
| 1647.00 | -162.60 | 9/23/11 | 197,628 |
| 1809.60 | -49.80 | 9/16/11 | 210,468 |
| 1859.40 | -22.50 | 9/9/11 | 227,714 |
| 1881.90 | 68.20 | 9/2/11 | 217,355 |
| 1813.70 | -32.70 | 8/26/11 | 230,436 |
| 1846.40 | 101.20 | 8/19/11 | 248,847 |
| 1745.20 | 86.90 | 8/12/11 | 249,206 |
| 1658.30 | 33.40 | 8/5/11 | 287,634 |
| 1624.90 | 22.50 | 7/29/11 | 282,973 |
| 1602.40 | 8.30 | 7/22/11 | 263,814 |
| 1594.10 | 50.10 | 7/15/11 | 244,249 |
| 1544.00 | 57.70 | 7/8/11 | 202,002 |
| 1486.30 | -13.30 | 7/1/11 | 208,755 |
| 1499.60 | -37.90 | 6/24/11 | 251,247 |
| 1537.50 | 5.00 | 6/17/11 | 237,429 |
| 1532.50 | -9.80 | 6/10/11 | 247,684 |
| 1542.30 | 6.80 | 6/3/11 | 240,508 |
| 1535.50 | 22.00 | 5/27/11 | 217,237 |
| 1513.50 | 19.80 | 5/20/11 | 206,949 |
| 1493.70 | 1.00 | 5/13/11 | 221,581 |
| 1492.70 | -73.00 | 5/6/11 | 240,102 |
| 1565.70 | 60.70 | 4/29/11 | 248,994 |
| 1505.00 | 18.60 | 4/22/11 | 266,548 |
It may be instructive to look at what happened the last time commercial net short's declined to this level.
| Gold | Change | Date | COMMERCIALS NET SHORT |
| 1486.40 | 11.50 | 4/15/11 | 253,688 |
| 1474.90 | 46.30 | 4/8/11 | 258,665 |
| 1428.60 | -1.60 | 4/1/11 | 240,769 |
| 1430.20 | 10.50 | 3/25/11 | 224,799 |
| 1419.70 | 0.20 | 3/18/11 | 220,154 |
| 1419.50 | -10.00 | 3/11/11 | 247,464 |
| 1429.50 | 20.90 | 3/4/11 | 250,596 |
| 1408.60 | 19.50 | 2/25/11 | 231,806 |
| 1389.10 | 33.20 | 2/18/11 | 218,626 |
| 1355.90 | 7.00 | 2/11/11 | 209,911 |
| 1348.90 | 11.00 | 2/4/11 | 193,197 |
| 1337.90 | -4.00 | 1/28/11 | 197,483 |
About $150 to the plus for gold, from January to April.
However, having pointed these situations out:
Could gold revisit its recent low? Could it move sideways for an extended time? Yes, and yes. Could it make new low's? Yes, again. With Europe primed and awaiting crisis, anything and everything is possible. But the commercials (producers) tend to have the best handle on the market, and this indicator tends to work over time.
That it doesn't "feel right" after the recent drubbing the shiny metal has taken is perhaps another powerful endorsement. That some of the gold miners turned up or acted firm Friday, when gold itself was struggling, is another positive. Historically, miners have tended to lead the actual metal....
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