The gold producer merchant went from over 550,000 net long ounces to last week being almost 1.25 million net short ounces.
It marked the end of a relatively long period where they were net long and many commentators mistakenly predicting it would be the blast off for precious metal prices. The gold producer merchant moved down to 843,000 net short ounces this week. They seem comfortable being back to their long term short game, but for how long? Can they play this game forever?
With the huge spikes we saw on Thursday after the COT week that the producer merchant bought huge shorts and the specs huge longs thinking a bottom is in or near.
By SD Contributor Marshall Swing:
Silver took a buck plunge or 5% down during the same time-frame on Wednesday in the COT week that gold dropped from 1270 to 1237 about $43 or 3.3% but my guess is gold led and silver followed.
In silver, overall commercials unloaded over 30 Million net short ounces and when we look at the disaggregated report we see virtually all of that action was on the part of the producer merchant.
Remember last week when I reminded you the commercials were still holding on to a ton of short contracts from two weeks before despite their unloading a ton of long contracts last week?
The producer merchant dropped down to 113 Million short ounces, quite low in recent years. Overall commercials is at a low of 74 million short ounces. The large specs and small specs bought massively on the short side and may have been forced out of those shorts on Wednesday after the COT report week. The swap dealers were virtually silent.
In gold, the overall commercial’s net positions did not change that much but the sell-off was huge. The producer merchant however executed a big short sell-off on the Thursday reporting time-frame. The gold small specs appear to have sold shorts massively at the bottom and reaped tremendous rewards. I told them this sell-off was coming… They have returned to just over net long status from net short. Smart guys! The swap dealers sold significant longs and bought significant shorts and are approaching 6,000,000 net short ounces!
My guess, with the huge spikes we saw on Thursday after the COT week that the producer merchant bought huge shorts and the specs huge longs thinking a bottom is in or near.
Same old game!