Charts suggest now is the perfect time to buy gold, says Jim Cramer

CNBC’s Jim Cramer told investors Wednesday that gold was poised to rally, making now a prime time for investors to pounce.

“The charts, interpreted by the legendary Larry Williams, suggest the general public is abandoning gold en masse and he thinks this is the perfect entry point to buy,” said the Mad Money host.

Gold futures fell on Wednesday, pressured by a stronger US dollar and Treasury yields, after dovish comments on inflation from Federal Reserve leaders the day before pushed the metals lower.

Gold is considered a safe haven asset and often attracts investors during times of economic and geopolitical turbulence.

Cramer began his explanation of Williams’ analysis by examining weekly gold movements since 2014 coupled with the Commodity Futures Trading Commission’s Commitments of Traders report data.

The CFTC tracks futures positions from small speculators, large speculators such as money managers, and commercial hedgers, which include companies that work with the commodity.

According to Williams, when small speculators get too optimistic about gold, it is often a sign that the peak is imminent. Conversely, gold tends to bottom out when small speculators get too bearish.

The Commitments of Traders data at the bottom of the chart shows small speculators are in their smallest long position since May 2019 – just before a major gold rally. It’s also worth noting that small speculators were in their largest net long position in four years during gold’s recent high in March.

While this doesn’t mean that investors should always do the opposite of what small speculators do, Cramer says it’s a sign that gold could soon gain ground.

“That would be too superficial, but he points out that the actual metal has rallied over the past 9 years when their net long gold position has been this low. And the best selling points all came at moments when they were big long positions,” said Cramer.

For more analysis, watch Cramer’s full explanation in the video below. Charts suggest now is the perfect time to buy gold, says Jim Cramer

Drew Weisholtz

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