In our fund (Slow Trader) we recently invested short – that is to say, we want the price to go down – in Gold, Silver and Copper. (This strategy is a one to three-month trade, but varies slightly for each commodity).
Fund exposure is currently £70,738 (we are leveraged)
Silver stop risk is £1,953 – between 4 trades.
Silver target is £4,633 – between 4 trades.
Gold stop risk is £1,252 – on one trade. (A limit order is in place to short more if gold price rises).
Gold target £2,518 – on one trade.
Copper stop risk is £1,929 – between 2 trades.
Copper target £2,918 – between 2 trades.
We use the Commitments of Traders (COT) report to give us a small edge. The COT is, other than cyclical analysis, probably the only indicator that is not price based. And, therefore, an independent view-point. We combine the COT with our own technical analysis of each commodity.
Here is an example of the COT released last night. The same information is available for each of our commodities. My attention is on what Commercial is doing.
The importance of getting the technical analysis right is due to the COT being in lag by nearly 2-weeks. Which, based on our strategy, is between a half and a quarter of the expected trade duration. In other words, we need to use a good amount of interpretation (and rely on technical analysis) for a significant chunk of the trade time.
More specifically, COT figures are from each Tuesday but are not available until late evening (UK time) on the following Friday (i.e. 10 days). As the markets are closed till Sunday night (UK time) it puts the COT information nearly 2 weeks old. But even with that considered it’s still the best, broad, indicative information we have – other than our own technical analysis.