I will start with posting my two tweets this Sunday.
So what is current positioning in these two precious metals and why should be care?
Let me first show you hedge fund positioning in platinum. We see that in more than 10 years hedge funds haven’t established a short position; positioning is also quite far away from a long term average.
And what is current hedge fund positioning in palladium? We see that we are very close to record long positioning established few years ago.
From this we could conclude that there could potentially be a big supply demand imbalance in both platinum and palladium, though in the opposite direction.
Before showing individual charts let me first show you the ratio between platinum and palladium. We can see that the price is squeezing into a falling wedge formation down there where the arrow points..
But not only that the ratio looks constructive should the price ratio start breaking higher, individual charts look good as well. Let me first show you the palladium chart. Price action created a multi month-long rising wedge and it seems price could break lower sooner rather than later. Because of the positioning it is not hard to see an aggressive selloff should the break lower really happen.
Quite the opposite could happen in platinum where the price is just above an important support (low created few months ago) and, again, due to supply demand imbalance market could move much higher very quickly…
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