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

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

“The charts, as interpreted by the legendary Larry Williams, suggest the general public is moving away from gold in droves and they believe this makes it the perfect time to buy,” said the ‘Mad Money’ host. “.

Gold futures fell on Wednesday, under pressure from a stronger U.S. dollar and Treasury yields after hawkish comments from Federal Reserve leaders on inflation the day before sent the metals lower.

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

Cramer began his explanation of Williams’ analysis by looking at weekly gold action dating back to 2014, paired with data from the Commodity Futures Trading Commission’s Commitments of Traders report.

The CFTC tracks the futures positions of small speculators, large speculators such as money managers, and trading operators that include firms that deal in the commodity.

When small speculators get too bullish on gold, it’s often a sign that it’s about to top, according to Williams. Conversely, gold tends to bottom out when smaller speculators get too bearish.

Trader commitments data, at the bottom of the chart, reveals that small speculators are in their smallest long position since May 2019 – just before there was a major rally in gold. It should also be noted that small speculators were in their largest net long position in four years during gold’s recent spike in March.

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

“That would be too flippant, but he points out that over the past 9 years, every time their net long position in gold has been this low, the real metal has rallied. And the top-selling points are all came at times when they had big long posts,” Cramer said.

For more analysis, watch Cramer’s full explanation in the video below.

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