CNBC’s Jim Cramer told investors on Wednesday that gold is poised to rally and now is the optimal time for investors to exit.
“Charts interpreted by the legendary Larry Williams show that the general public is abandoning gold en masse and he thinks this is a great time to buy.”Crazy money“said the owner.
Gold futures fell on WednesdayFaced with pressure from a stronger U.S. dollar and Treasury yields after Federal Reserve leaders made tepid comments on inflation earlier in the day, metals fell.
Gold is considered a safe investment and often attracts investors during periods of economic and geopolitical turmoil.
Cramer began his explanation of the Williams analysis by examining gold’s weekly action dating back to 2014, along with data from the Commodity Futures Commission’s Trader Commitments Report.
The CFTC tracks the futures positions of small speculators, large speculators such as money managers, and commercial hedgers, which include commodity companies.
According to Williams, when small speculators lean too much into gold, it’s often a sign that it’s about to peak. Rather, gold tends to be near the bottom when small speculators become too bearish.
Trader commitment data at the bottom of the chart reveals that small speculators are at their smallest long position since 2019. May. – right before the big gold rally. It’s also worth noting that small speculators took their largest net long position in four years during gold’s most recent peak in March.
While that doesn’t mean investors should always do the opposite of what small speculators are doing, it’s a sign that gold could soon rise in price, Cramer says.
“That would be too simplistic, but he points out that over the past 9 years, when their net long gold position has been so low, the real price of the metal has gone up. And all the best selling points have come when they have had a lot of long positions.” , Cramer said.
For more analysis, watch Cramer’s detailed explanation in the video below.