COMEX Money Managers

Money managers is category of Comex traders specified in the disaggregated version of the Commitments of Traders Report (CoT report) published by the Commodity Futures Trading Commission (CFTC), which represents registered commodity trading advisors (CTA), registered commodity pool operators (CPO), and unregistered funds identified by the CFTC that engage in managing and conducting organized futures trading on behalf of clients. As one can see, that group is very similar to non-commercial traders. The only distinction is that non-commercials are divided into money managers and other reportables in the disaggregated version of the CoT report.

From an investment perspective, the money managers’ positions indicate market trends, at times. As one can see in the chart below, money managers are usually net long (compared to producers, they take the opposite side of the trade). Contrary to commercials, they usually follow trends in the gold market – they increase their net long position when prices rise and scale it back when prices decrease. For example, when the 2000s bull market continued, money managers were adding more net long trades. Consequently, close to the end of that rally, they had their most bullish positions. In other words, money managers are generally on the right side of the market, but they tend to become overextended near peaks and bottoms. This is why investors look at money managers and use changes in their positions as a sentiment indicator for the gold market – money managers tend to be most bullish just prior to significant price tops and most bearish before significant price bottoms.

Chart 1: The price of gold (yellow line, right axis, London P.M. fix) and the net position of money managers (green line, left axis) from 1986 to March 8, 2016.

The price of gold and the net position of money managers on COMEX based on the COT report

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