Bit of chatter on the Gold front

Just reading a report from one of the big Prime Brokers on overall professional positioning in the Gold market. The typical macro-fund portfolio over the last few years in the ‘global macro’ space which covers futures, commodities and currencies, has looked something like this; short EZ assets and short EUR; long CHF and AUD assets and long both of these currencies as well; long Gold derivatives.

This is of course somewhat of a simplification but these positions are usually monstrous and can take a long time just to get back to neutral. We are seeing the Yen become the funding currency of choice, taking over from the not-so-beleaguered EUR. We are seeing long positions in the CHF get drastically reduced. The two trades which haven’t yet developed are the sell-offs in Gold and AUD, but macro positioning would suggest that these two moves are not far away.

After reading this report, the obvious trade to me is to be long EUR/AUD, but after getting stopped-out at the absolute low before the rally began, I simply don’t have the stomach to chase it 🙁

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