The collapse in gold price from a high of USD$ 1,900 per ounce in August 2011 down to USD$ 1,340 has led many investors to wonder whether gold will continue its downward spiral.
One of the most powerful price indicators is the net positions by professionals who hedge gold. These hedgers are not those speculators or traders in the commodity market, but rather, most of them are legitimate hedgers who are owners of mining companies. They use options and futures contracts to hedge their position, to ensure a positive fiat-margin on the mining.
Currently, the hedgers are the least net short in a dozen of years. This means that they have not been so bullish on gold since it was priced at USD$ 300 per troy ounce. If you choose to follow these insiders, now would be the time to buy gold.
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