Traders who purchase large volumes of contracts and whose activity drive market price.
They are either Commercial Traders who intend to deliver or take delivery of the Commodity or Non-Commercial Traders (Speculators) who will dispose of their contracts, by offsetting them with an identical buy or sell contract, before delivery comes due with the intent of making a profit or avoiding a larger loss.
The separate reporting of these two groups is unique to commodity trading and does not exist in the normal stock market. Some describe its use as legal insider trading. Knowledge of whether the Speculators are driving price, or are running for the hills, is of great value to the savvy trader. This is the only website where their actions are made clear, particularly through the value and trend of the Commercial and Speculator COT INDEX.
More information on the COT INDEX is provided below.
THE COT INDEX can apply to the Commercial, Non-Commercial (Speculator) and Small Traders. This is the only website that provides all three values and trends every week.
However, first of all we need to explain the "Net Contract Value". A commercial trader may buy 1000 contracts (of a specified size) of Corn, another commercial trader may sell 800 contracts of Corn, even perhaps with a different delivery date. The "Net Contract Value" of these two transactions is (1000 minus 800) which is equal to 200. Apply this calculation to all the Corn contracts for the week and you have the final commercial trader "Net Contract Value" number. History shows that changes in the "Net Contract Value" may correlate with changes in price.
The COT INDEX is derived from the "Net Contract Value" in the following manner: If, looking back over each week of the previous 18 months this weeks commercial "Net Contract Value" exceeds all previous values, the COT INDEX is assigned a value of 100%. 100% means that we have a record value for the sale of commercial net (long minus short) contracts. If the "Net contract value" is less than all previous 18 month values, the commercial COT INDEX is assigned a 0% value. All other COT INDEX values are assigned proportionally, e.g this weeks "Net Contract Value" that is half way between the previous min and max value, is assigned a value of 50%.
A common mistake is to believe that once the index hits 100% there will immediately be a reversal. If a trend is strong the following week may result in an even larger "Net Contract Value", thereby creating a new 100% , with all previous values adjusted proportionally.When 100% is reached, it simply means that it is the largest value in the past 18 months, therefore one might expect a reversal.
Investing In Gold Bullion
For investors looking to step into the precious metals space with gold bullion, there are a number of ways to invest in the yellow metal market. One way is through gold futures, which is a common strategy among many commodities, including precious metals.
Putting it simply, futures are a financial contract between an investor and a seller. The investor agrees to purchase an asset from the seller at an agreed-upon price based on a date set in the future.
Where they are traded
In the US, investors can buy or sell gold futures contracts on the New York Mercantile Exchange (NYMEX) in contracts of 100 troy ounces and are quoted in US dollars per ounce. For example, US $1 equals US $100 per contract, with a minimum price fluctuation of 10 cents, or US$10 per contract.
Typically, NYMEX contract months include February, April, June, August, October and December, with trading closing on the third to last business day of the delivery month.
Another place gold futures can be traded is the Tokyo Commodity Exchange, where the contract size is 1 kilogram per contract, which is approximately 32.15 troy ounces.
As of July 2017, gold and silver futures trading has been available at the London Metal Exchange. Since then the exchange has reported high volumes of futures trading. (as noted at the InvestingNews.com website)
Buy & Sell Gold Coins
It is understandable for investors used to the instant liquidity of the stock market to shy away from investing in collectible items, but Stuppler said during an interview that “rare coins have the best liquidity of any collectible out there.
Wether raw gold bullion, foreign gold, gold kilo bars, gold bullion collections, gold bullion coins, gold Eagles etc. At the increasing rate of 20 to 30% per year. A highly reccomonded gold dealer in Sacramento CA claims to have the best prices on gold in their local area or even Online. A bold claim indeed, but they sell with little to no priemiums so a return is even higher & faster than if you were paying high premiums elswhere.
Do both and deversify your investments.