Figure 3.3 shows this to be true of gold. The commercials were net short as early as 2002, yet the market did not plunge. That greatly confused many followers of this information, but not you and me, as we know it is the extremes we look for. Indeed, the major decline of gold in 2004 began with a historically large amount of selling by this smart money crowd. I admonish you to keep this point in mind: it is the extremely bullish or bearish stances the commercials make that tip us as to what to do. If they have just begun more selling than buying, unless that is an extreme level, it means very little to us.

FIGURE 3.3 Gold Chart