Gold & Silver COT Report 3/1/13: Commercials Reduce Massive Silver Shorts by 35 Million Ounces

Massive shortsBy SD Contributor Marshall Swing:

Gold & Silver COT Report:

Commercials sold 1,699 total long contracts and covered a whopping 8,769 shorts to end the week with 46.66% of all open interest, a decrease of 0.45% in their share since last week, and now stand as a group at 154,430,000 ounces net short, which is a decrease of over 35 million net short ounces from the previous week!!

 

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Large speculators sold off 1,304 longs and added a huge 3,415 more short contracts decreasing their net long position to 108,685,000 ounces, a decrease in their net long position of over 23.5 million ounces from the prior week.

 

Small speculators decreased their long total by 2,639 contracts and reduced their shorts by 288 contracts for a net long position of 45,745,000 ounces a decrease of almost 12 million ounces net long from the prior week.

 

Silver started the COT week at $29.43 and closed at $29.40 with a low of about $28.25  From the low price worked its way up to about $29.50

 

On Wednesday of the COT week, we saw a tremendous selloff accounting for the massive short coverings by the commercials.  Interestingly, it was the swap dealer who covered the majority of the shorts and also picked up 2,933 long contracts to their total and now stand at almost 40 million ounces net long.

 

It is truly the swap dealers who have led this charge to the bottom as the producer merchant portion of the commercials still has 194 million short ounces at their disposal.

 

Have we defined a bottom? While many writers are saying the bottom is in, I caution everyone to realize there is still a massive amount of damage that could be done as in late June the combined commercials were at 60 million ounces net short and as of COT close last Tuesday afternoon still have 154 million ounces net short.  At the same time last June, the swap dealers were 98.5 million ounces net long and the producer merchant was at 158.5 million ounces net short.  So, theoretically, we might have another 150 million ounces to the downside before a true bottom is defined.

 

Of particular note, the large speculators have taken close to 9,500 short contracts in the last 3 periods so my thoughts are that the commercials will punish those speculators to the upside so they do not build on their profits then continue the downward trend.  The small specs also picked up about 4,500 short contracts over the same period.  This past Tuesday morning we saw the commercials engineer a big gap up in price but judging from volume I do not think they were able to shake out a lot of the speculator shorts.  Price deteriorated from there at about $29.50 down to $27.92 on Friday morning so the speculators may be battling to save their short profits.

 

If the speculators are fighting it out amongst themselves for a lower price then you can bet the commercials will take full advantage in the near future.

 

In gold, the price rise last Tuesday morning was much more powerful than in silver and gold may be the new front for the precious metal price war.  The large specs bought over 6,000 long contracts near the bottom at $1554 around Thursday of the COT week and may have profited handsomely by selling after the high at $1620 on or since late Tuesday morning.

 

 

 

Comments

  1. Judging from the size of some of the people that I see there, that pair of shorts must belong to a Wal-Mart shopper.

  2. COT info is sometimes an indicator, many times not. And this we can only view hindsight …

  3. I dont understand why the COT reports posted are always the opposite of what shortsqueeze.com reports.  They show an increase of silver shorts of 25%.

  4. If the speculators are fighting it out amongst themselves for a lower price then you can bet the commercials will take full advantage in the near future.
     
    Why don’t we just give them guns so they can get it over with and just Maybe we can end up with a PHYSICAL PRICE instead of a Paper Price.
    I would rather use the word Value but it would ruin the sentence. Lol

  5. @Marchas45, speaking of PHYSICAL price vs. PAPER price, I decided to sell twenty common-date Silver Dollars for $29/ea.
    When I was speaking with a potential buyer, he pointed out the spot price for these is around $22/ea.  I immediately cut him off in mid-sentance to explain to him the difference between PHYSICAL price and PAPER price, and invited him to keep looking if he is dead-set on picking up Silver Dollars at the PAPER price.
     
    We are meeting Wednesday to do the deal.
    I will take the $580 to my LCS and buy 26 more Silver Dollars because he sells them to me at spot, and come out ahead with six more Silver Dollars for my troubles.
     
    Nothing wrong with trading, if it ultimately increases the size of your stack!

    • Bloody hell that’s a better deal than this cheap Scotsman can get. $7.00 over spot, $140 extra to buy more. You devil you. Lol
      and your post below tells me something, you carry like me. Lol

    • I can get American silver dollars for about 23$ per piece at one of my local coin shop. Then, I could sell them for around 28-30$ at another coin shop. But, the law requires me to be older than 18 years old. :(

    • last ones I ebayed went for $32-45 11 of them I think

  6. Perhaps I should email this buyer the following news article, just in case he is thinking about trying to get these coins for free:
    ———————————

    A Mason teen was shot and killed early Monday morning after allegedly trying to rob a gas station in Hamilton County, Springfield Twp. police said.
    Lashawn Daniels, 19, from the 700 block of Eagleview Court in Mason allegedly pulled a gun on an employee at the Sevenhills Sunoco, 10960 Hamilton Ave., around 12:30 a.m. Monday morning, police said. Daniels allegedly forced the employee behind the counter and demanded cash from the register.
    As the employee was complying with Daniels’ demands, a second employee came from an office area and several shots were fired, police said. The store employees were not injured. Daniels died at the scene, police said.

    ———————————
     

  7. I’ve been stacking for longer than I care to remember and can care less about the cot bulls#!T numbers. Now days I trust nobodys opionion on the gold and silver “paper” trade ! the object of the game is to chase you out of pm’s and into stocks, well good for the muppets that are both feet into this farce of a stock market! I hope they make millions and have nothing against them! As for me I’m selling some of my $250 @ oz gold and to get off the grid, just about finished with the solar water pump for my well as our rural water company charges about $40 a month for our nasty tasting water! and thats just water nothing else! our utilities are going through the roof and I’m sick of it! time to go back to simple days without the poisen that is killing us all! RANT OVER

    • “Can care less”? How Much less can you care? Unless you mean ‘couldn’t care less’ ?

    • Maybe those expressions have come to mean the same thing?  Like “flammable” and “inflammable”.  Every other example that I can think of where “in” is added to the front of a word, it means “not”.  Not in this case, though.  Yeah, for what it’s worth, I always say “could not care less” too, but that might be a regional thing.

  8. Let the cartel play as long as they want with their paper silver and with their paper gold. Because all of that will soon end when the supply and demand runs over the manipulation especially when the fiat currencies are getting devalued by the central banks.

  9. Availability of silver is shrinking, premiums keep rising. The disconnect from paper has started.

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