Gold & Silver COT Report: Commercials Shift Silver Position Another 9 M Oz Net Long!

goldcotBy SD Contributor Marshall Swing

Gold & Silver COT Report 6/28/13
Commercials continued their pace during the reporting period and moved 9.25 million ounces towards becoming net long.
Large speculators cut their net long position by over 75% moving 15.33 million ounces towards becoming net short.
Small speculators moved over 6 million ounces net long.

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Commercial swap dealers packed on almost 2,400 new longs and covered some shorts and continue to move more net long.

 

Last week’s silver move to the downside was primarily due to a short covering raid by the commercials but was equally enforced by trader’s only offering lower prices for the metal and large speculators still willing to take short positions into the decline.

 

After the COT week, we saw a decline into the $18 range but on low volume.

 

Friday morning saw massive volume with almost 18,000 contracts, almost 90 million ounces, trading in one hour alone and price moving from $18.72 to as high as $19.44 during that hour.  Price is now at about $19.70  This volume and movement is showing sustained interest in buying silver at slightly higher prices and is symptomatic of one or more traders with deep pockets believing a bottom could have been made and seeking to take advantage of it.  My guess would be this was a hedge fund rather than a commercial player because if the commercials knew the bottom was in they would have bought far heavier.

 

Gold saw tremendous new open interest of almost 14,000 contracts and there was a massive short covering by the swap dealers and that could be the reason both market saw downside on Wednesday and Thursday last week, after the COT reporting period.  Of particular note, the gold producer merchant bought longs and shorts heavily so there seems to be some division there and their short buying needs to be watched as that could signify a bottom.  Large gold speculators took almost 8,000 new short positions but remember they are always ‘flying blind’ as far as knowing when the bottom will be made.  It is the commercials who determine when the bottom is made by virtue of them having 47% of all short and long contracts.

 

Much has been written in the last week about price approaching or breaching the cost of production.  It should be a reminder that mines usually sell product far in advance and most locked in their production at significantly higher prices.  Also, they do not have to sell product at the spot price.  The spot price is just a marker from which to do business.

 

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Comments

  1. Raise your hand if you believe numbers in an Excel spreadsheet produced by crooks.
     

    • Seems reasonable to me, if silver is at 3 year lows and you are an end user (“commercial”) it might be reasonable to hedge some of your future silver needs, despite what appears to be a softening economy.  If you are a silver producer you are living off of your short hedges and not selling the current markets unless absolutely necessary for cash flow or unless you are making small profits.

    • Seems reasonable if you believe scumbag bankers who are out to take every last thing you own.

    • These numbers are bullish.  Like it or not people trade them, they impact the price of the commodity i wish to buy, therefore I pay attention.

  2. Using gold and silver to play these games since the system is in place that allows them to do it and get by with it? Why don’t they just move into another game and sell/buy real estate on one of the newly discovered planets? They can then play that game to infinity, until we actually go there.
    If that sound ridiculous, it is, because the real and only reason is the FED being in the game wanting to keep the lipstick on the pig dollar. 

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