Gold & Silver COT Report: Commercials Reduce Silver Shorts Another 7 Million Oz

goldcotGold & Silver COT Report by SD Contributor Marshall Swing:

Commercial longs added 1,037 contracts to their total and covered 255 net total shorts to end the week with 49.60% of all open interest, a decrease of 1.09% in their share of total open interest since last week, and now stand as a group at 59,630,000 ounces net short, which is a decrease of almost 6.5 million net short ounces from the previous week

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Large speculator longs decreased by 157 contracts and picked up 1,822 net short contracts decreasing their net long position to 44,075,000 ounces, another huge decrease in their net long position of almost 9.9 million ounces from the prior week.

 

Small speculators added 1,489 long contracts to their total and added 802 short positions for a net long position of 15,555,000 ounces an increase of almost 3.5 million ounces net long from the prior week.

 

Silver opened the COT week at $23.35 and closed at about $22.40 but what happened in between on Sunday afternoon was absolutely amazing as silver crashed from $22.26 to $20.25 in a matter of minutes.  At the same time, gold crashed from $1361 to $1336.  The percentage crash in silver was just under 10% and the crash in gold was almost 2%  That equals quite a disparity in the reaction of the two metals.

 

First and most important is the overall trend this week’s numbers reveals.  Commercials bought new longs at a rate of 4 to 1 over the number of shorts they covered.  Large speculators continued to make overall short bets outpacing their long purchases by a margin of 12 to 1 and small speculators long purchases outpaced their short buying by almost 2 to 1.  This tells us that the overall trend in speculators going short is still intact.  In the disaggregated commercials we see the swap dealers covered 856 shorts, not shabby but not huge.  In gold, we see similar thinking in the large specs taking massive new short positions while the small specs predominantly covered shorts and the overall commercials is a dead heat but the disaggregated commercials reveals a massive short covering by the swap dealers.

 

Much has been said this past week about “lack of bids” but it is truly not a lack of bids that caused the collapse but the price at which the offered bids for sales were priced.  When you get down to it, it is always psychology and strategy traders are still betting prices will go lower.  Gold swap dealers covered 7,864 contracts in what I believe was a huge player deciding to take profits and once that happened new longs in the game simply had their sell stops blown wide open and a typical short covering crash ensued.

 

By the numbers, it is clear that gold led the way, drug silver into the abyss and it was silver, not gold, that did not have new long buying interest until all of a $2 drop in price had occurred.  Gold long buyers jumped in quickly and the yellow metal was spared indignation but the white metal’s weakness was thoroughly embarrassed.

 

Overall, we appear to be headed lower in price because there is still enthusiastic short positions being taken by managed money speculative traders in both metals.  That will not last much longer then we are probably in for a protracted period of stagnation as the commercials will only become happier with their new and increasing long positions and while the speculators will desire longs at the bottom there will be no one around to take the short side for quite some time to come once the near bottom is reached.

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Comments

  1. So what, free beer tomorrow? We have an increasingly apparently bullish report, we have confirmation that a not insignificant amount of gold in central banks is double counted, we have large demand..
     
    YET… the price is still AT BEST rangebound, and at worst set to shiit the bed… again.. still..
     
    Maddening.

  2. Hey look, waterfall smash in progress.. let’s do this collapse already.

  3. Getting really, really tired of the rhetoric. BS getting higher than my chin, getting really, really hard to breathe above the stench. Markets up on world money printing??????

  4. THIS IS THE NEW NORM. THE METALS WILL BE HEADING LOWER OVER THE NEXT SEVERAL MONTHS, NO DOUBT ABOUT IT. THE U.S. STOCK MARKET IS IN A BULL MARKET, LIKE IT OR NOT. THE DOLLAR IS GOING TO BE GETTING STRONGER OVER THE NEXT YEAR NOT WEAKER AS SOME WOULD HAVE YOU BELIEVE WHICH IS NEGATIVE FOR THE METALS(SHORT TERM).

    • SLG,
      Been listening to the new norm for way too long. BS holds the stock and bond markets up and when the end does come
      anything will be worth nothing.

  5. After watching the two movies WAG THE DOG and BULWORTH, I refrain from believing anything now!  Everyday it is “we’re getting closer” are “a new era is just around the corner”.  Trusting bankers and politicians is like placing your bedroll in a rattlesnake den and believing everything is safe and sound…….yeah, right!
    The USA will look like a empty tin can after all the PMs are sent East and we’ll all be fighting over the few bananas that are left!

  6. I have determined girls after reading this blog and many others over the last 2 years now that we have been duped by the pm experts. I realize that they were doing their best to inform but best doesn’t mean shit when you’re talking about people’s money. Sinclair and all the rest have done more harm than good to the average guy here that was trying to protect his/her wealth. Notice now that all these guys are pushing out the pm parabolic moves several years from now. Wow. Should have stayed in the market like my buddies have these last 2 years.

    • Hey I’m a BOY!

    • Agreed. Don’t know about staying in the market, but there are other solid investments. Really P O’d that the Guru’s never show up when things go opposite from prior predictions. Heck our judgement is better than theirs. Of course they sell their newsletters and peddle metals and we eat the corn waiting for the upside. Once Doc stated that Silver will always be worth something, Hell a 1957 Cadlllac is still worth something, but not what you paid for it. in 1857.

  7. Alice through the looking glass market IMO.  You’ll see 6 impossible things before breakfast. 

  8. I’ve been laughing at the so-called “gurus” for quite awhile now.  I’m more inclined to  hear what someone like Jim Rogers has to say.  In an inverview not too long ago Rogers said he would be buying gold again at around 1300.  What I like about Rogers is that he’s not about hype, he takes a common sense approach. 

    • well Jim Rogers feels that there is no manipulation in the gold market.. which makes him and idiot or aliar, and he isn’t an idiot. Maybe he knows what happens behind the curtain and is just not being truthful.

  9. if you look at the disaggregated report you see long hedges for procurs/users/merchants/processors category decreasing and short hedges increasing.  Tells me of the people involved in the cash markets day to day, at least over the past week, we find more sellers than buyers… thanks for posting, encouraged me to do some of my own research.
     
     

    • again lack of edit, this is for gold.  silver showed shorts increasing an dlongs increasing, shorts outpacing the longs but not by a margin i would call significant.

  10. If you can trust this data anymore…

  11. So many depressed responses…
    Why not salvage the time added where we have a chance to up our stacks?
    The day of exit doesn’t change due to these low prices. The up move which always follows at some stage, will be only more violent, and you’ll be sitting on a larger stack. If anything, this silliness may actually advance the silver spike, and intensify the sortage if or when they really occur. Again, you’ll be sitting on more silver that day. Would you rather be buying at $75 today? Or would you be selling? At $75, I won’t be net selling my silver. And I won’t be at $100. Or only to swap to gold or expecting a price drop to get back in even harder (unlikely gamble).
    Sure I expected higher prices sooner (very few dared to speak out otherwise the past years), and didn’t dare to hope for this opportunity. And guess what? My stack has grown 25% larger than I expected it to end 2013, or 2015 for that matter. So, I’m grateful. Fundamentals don’t change due to unexpected price action to the downside. They only get better. When I sleep badly at night, it’s because I’m looking for ways to stack more, not worrying about the price I stack at. My horizon is 10 years, and I am willing to move out those 10 years while I’m adding to my position. 
    I just hope that silver won’t wait too long until after land prices dip, as I have a vineyard to buy. I am tracking the silver-vineyard ratio closely and hope for it to reduce some 90-95% hereonward.

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