By SD Contributor Marshall Swing:

Gold & Silver COT Report 12/15/12

In silver, Commercials added 1,105 longs on the week and 514 shorts to end the week with 48.19% of all open interest, an increase of 0.45% in their share since last week, and now stand as a group at 289,615,000 ounces net short, which is a slight decrease of just under 3,000,000 net short ounces from the previous week. 

 

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Large speculators removed 1,656 longs from their total and added a mere 116 short contracts increasing their net long position to 197,500,000 ounces, a decrease in their net long position of almost 9 million ounces from the prior week.

 

Small speculators added 510 longs and covered 671 short contracts for a net long position of 92,115,000 ounces an  increase of almost 6,000,000 ounces net long from the prior week.

 

This was a pretty boring reporting period in silver.  Overall price started the week at $32.92 and close at $33.06 but there were quite some ups and downs though we have not seen so little change in open interest positions in almost 1 year.

 

Last week I had predicted a drop in the silver price and though we did not get the drop during this past COT period we got it about 24 hours later.  It was not simply a raid, however, as price rose dramatically and almost instantaneously to $33.87 on Wednesday only to begin its fall moments later and keep falling well into Thursday to a low of $32.28.

 

Since the COT close on Tuesday afternoon, the total open interest has increased by near 1,100 contracts which may mean speculators taking short bets the price is going lower but my guess is it is also speculators who are taking the long side of those bets and thinking a bottom is in place.  We will not know until next week’s COT but should understand even after a raid of this magnitude the commercials still possess a tremendous net short position and can take price lower if desired.  As we approach the holidays it is typical that trading grinds to a trickle on the COMEX so do not be surprised to see much lower prices.

 

In gold…

 

On Wednesday, there was a huge short covering raid on gold as we see the producer merchant reducing their short shares by over 10,000 contracts.

 

Overall, the numbers tell me that gold instigated the Wednesday raid during the COT week but after the period it was the silver commercials who took silver to the cleaners with gold following.  When you compare the gold to silver ratio, the latest price drop was far more dramatic in silver than gold and started with more power and precision.  It’s almost as if the silver commercials waited until their gold counterparts had completed their work this past period and then unloaded on silver speculators.  If you compare the gold and silver charts from late Wednesday through late Thursday of this week you will see silver dropping about $1.60 and gold dropping over $25.

 

As always, for your convenience, if you would like to contact the CFTC and express your views on the commercial trader’s unfair dominant short position, I have provided you their phone numbers and I hope earnestly that you fill up their phone lines: http://www.cftc.gov/Contact/index.htm and email addresses as well:

 

ggensler@cftc.gov  Chairman Gensler

 

bchilton@cftc.gov  Commissioner Chilton

 

jsommers@cftc.gov  Commissioner Sommers

 

Somalia@cftc.gov  Commissioner O’Malia

 

mwetjen@cftc.gov  Commissioner Wetjen

 

dmeister@cftc.gov  Director Meister

 

  1. I have written numerous times to these “do nothings” at the CFTC.  They will continue to do nothing about the silver short position by JP Morgan.  I just saw a video of Blythe Masters and Gary Gensler on the same panel at Columbia University.  Now there is a conflict of interest if I ever saw one. 
     

  2. Well Marshall I guess your the only one that’s not calling it a raid but that’s ok you can take the credit and for calling the drop even if you where a day late. Big payday tomorrow so I have to go and spend some Fiat on some wealth. Keep Stacking.

  3. Dear Marshall,
    Thanks for the report. You are always right, I am 100% with you on that sliver was waiting for gold finishing dropping, then it followed. It’s really tricky… and now both gold and silver go back to the price level of Sep 7th. 
    2 questions I’d like to ask:
    - the gold commercials take longs for 3 weeks in a row. Does this mean they have no wills to hammer the price?
    - the gold net short holding by commercials is back to a common level, but silver net short is still very high in commercials hand. What does this mean? Before you said silver follows gold’s trend, but this may not continue long. Do you really believe this could happen soon?

    Thanks 
    Matthew

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