At the moment, there are lots of big positions  is another. On the one hand you have lots of ‘investors’ shorting Treasuries, on the other hand you have lots of ‘investors’ shorting gold. Nearly all time record amounts in both. The market has no doubt that rates are going up and the dollar is going to rise on that, sending gold lower and treasury yields higher.


 complacency and large positioning implies greed. I am certainly not suggesting that the reasoning is  gets usurped by greed, then stand back. We are close to that scenario in a lot of places (see chart 3).





Perhaps most interestingly, it is not simply a bloated speculative short that is relevant, it is the size of the overall positioning, long and short. At the moment, the open interests in futures are exceptionally high. In real life commodities, there is only a certain amount of resource. Normally and logically, supply and demand and the balance between those, dictates the underlying price. However, the rule book appears to be being thrown  that in reality doesn't exist. A dangerous game of pass the parcel meets ‘chicken’.


 to nearly double what the average was last year. CTA’s, speculators and momentum algos are all chasing the game, while building positions that it will be hard for the underlying commodity to stomach if it turns quickly.


The equity markets might simply be too dull for these titans of speculation to be excited by.


 twice what the average was last year. A lot of commodities display similar patterns and during the slow summer months when volumes dry up alongside the arid turf, danger lurks with such over- 


Andy Ash E: andy.ash@admisi.com


Chart 4


Chart 5 Source: Bloomberg


Source: Bloomberg


LOW VOLATILITY IMPLIES COMPLACENCY AND LARGE POSITIONING IMPLIES GREED.


23 | ADMISI - The Ghost In The Machine | July/August 2018


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32