Industrial Metals Near Bear Market As Miners Collapse

This is an abridged version of our Daily Report.

Industrial metals suck, too

Precious metals’ lesser-followed kin are nearing a bear market, worrying investors as they are traditionally seen as being leading indicators of economic activity.

Once in a bear market, industrial metals tend to keep losing, but that didn’t serve as a damper on returns in emerging markets or mining stocks.

Major pressure in miners

Almost every U.S.-traded gold mining stock fell to a 52-week low on Wednesday or Thursday.

That’s the biggest cluster of 52-week lows in the miners in five years. In the past 25 years, similar clusters signaled capitulation selling and excellent medium-term returns.

The latest Commitments of Traders report was released, covering positions through Tuesday

“Smart money” hedgers reduced their net short position in gold, now holding less than 2% of open interest as a net short, only the 2nd time in 15 years (early December 2015 was the other, which was the bottom for gold prices). Their total position in precious metals is now among the most position since 2002.