West Palm Beach (HedgeCo.net) – In the last week leading up to today, (Tuesday) hedge funds and other "large speculators" took their largest bullish position (when compared with the number of bearish bets) since early August.

Commercial traders such as refineries, mints, wholesalers and bullion banks, took their smallest bull position in 19 weeks, as they sold the "long" contracts bought by speculative players.

This has returned the balance of bull/bear positions in December to what has been considered the norm for the last four years, with over 85% of speculative position betting on a rise.

Last week also saw the outstanding number of open contracts in Gold Futures and options rise more than 9%, but it remained one-third below the record set in Jan. 2008.

"If gold can close the year above its January 2008 open, it will be one of the few positive asset stories of the year," notes new analysis from Mitsui, the precious metals dealer in London, "from a wealth preservation perspective at least."

"With the Bernanke printing press set to move into overdrive next year," Mitsui said regarding the future of Gold in 2009, "along with the not so pretty reality of negative real interest rates, it is difficult to put together a positive thesis for the US Dollar," Mitsui said, "In such a climate, gold could flourish."

Alex Akesson