Submitted by SD Contributor Marshall Swing:

Silver COT Report 10/12/12

Commercial coffers increased a mere 396 longs on the week and covered a minor -440 shorts to end the week with 46.06% of all open interest, a decrease of -0.45% in their share since last week, and now stand as a group at 285,020,000 ounces net short, which is a decrease of just over 4,000,000 net short ounces from the previous week. 


Large speculators continued heavy buying adding 2,162 longs and added just a few 455 short contracts increasing their net long position to 199,125,000 ounces, an increase in their net long position of just over 8,500,000 ounces from the prior week.


Small speculators sold off -1,638 longs but increased 905 short contracts for a net long position of 85,895,000 ounces a massive decrease of 12,715,000 ounces net long from the prior week.


Silver was down over $1 during the reporting period and for the first time in two months the small and large speculators appear to have divergent strategies or results.  If in fact there is such a thing as precious metal manipulation, then the commercials now have the speculators right where they want them with large specs buying a huge chunk of longs and the small specs selling their huge chunk.  It could well be the small specs do not believe this silver rally has any legs left.  As of Friday afternoon, price has deteriorated to $33.47 which is well below the roughly $34 price the large specs bought their longs.  If price is raided again, we will see some significant long selling.


Few silver bulls doubt the cartel raided price this week with a massive short covering but interestingly the numbers for the commercials do not show that much action by those commercials, on the surface.  What these numbers do show us is that if the commercials covered massive short positions to drop the silver price then they bought those positions back at lower prices just as hard as the speculators bought longs at lower prices.


Other than that theory, the only plausible explanation is so-called raid was actually the small specs selling their longs engaged in profit taking followed by the large specs buying.  I do not subscribe to this theory as the total number of longs sold by the small specs is too high and would indicate some coordination in their selling.  I tend to believe stops were tripped Friday afternoon continuing into Sunday trading in Asia.


So, overall, we have minimal powder expended by the commercials and a more than $1 drop in the spot price.


Conclusion, it will take some serious long buying resolution on the part of the small specs for this rally to stabilize or move up in price, otherwise, expect significant price deterioration in the near future.


As always, for your convenience, if you would like to contact the CFTC and express your views to them, I have provided you their phone numbers and I hope earnestly that you fill up their phone lines: and email addresses as well:


[email protected]  Chairman Gensler


[email protected]  Commissioner Chilton


[email protected]  Commissioner Sommers


[email protected]  Commissioner O’Malia


[email protected]  Commissioner Wetjen


[email protected]  Director Meister


See you next week!



  1. Good looking out…should be interesting to see what’s to come. I’ve been set for my next move.  These commercials….we are talking about some of the top analysts in the world here. They rode this hill up, saw its end and piled up on the short side.
    Not every move down is a result of manipulation. Ups and downs would happen in a fiat money system, whether there was outright manipulation in the market or not. A lot of these commericals saw what was coming anyway. They saw a weakness and they are taking advantage of it. 
    Who here doesn’t try to buy low?

  2. If i understand this correctly, then:
    Commercials effectively longer by   4 000 000
    Large specs longer by                    8 500 000
    Total long increase                      12 500 000
    Small spec long decrease             12 715 000
    Net long decrease a mere                 215 000

    So did a net long decrease of just 215 000 ozs cause a one dollar price drop from last Friday 5 October? Does that sound plausible?
    I’m working off Marshall’s written summary of the changes, but I admit I cannot see from the COT tables themselves where the figures
    400 000, 12 500 000 and 12 715 000 come from. The COT report remains a mystery to me, and without someone to decipher it I have no clue. Should’nt all the long increases be exactly equal to all the short increases – on the basis that for every buyer (longs) there must be an equal and opposing seller (shorts)? How come there’s a difference then of 215 000?
    What really caused a price drop of one dollar?

  3. @Andyz, and XC

    Good questions and analysis!  Nice to see someone actually thinking about the numbers and trying to derive some conclusions…

    Several things to be aware of here.

    First, there exists 1 long for every 1 short in a future’s contract so there is nothing to be gained from just looking at the total number of shorts or longs and trying to derive something as far as trend goes.  About the only thing that can be derived from the total open interest a trader has in a certain direction is their tolerance for believing the spot price is going to go up or down and how much capital they are willing to lay out there on the line in order to defend their position or back their belief.

    Second, whether price increases or decreases is not a function of how many contracts any particular trader changed their net total.

    Third, it is important to remember in the aggregated totals that the spreading category hides some of the balance of the numbers so when you do a tally on them everything does not balance out exactly like you thought it would but as you see it is close.

    What is most important in the futures analysis, I think, is psychology and history.

    I say psychology because current trend goes a long way in determining whether a trader decides to risk taking short positions or long positions.  The current trend is more than just the numbers, it includes market sentiment, fundamental factors of all kinds, etc.  I say history because if we add up the last few weeks of a trader’s direction we can get some idea of their tolerance for continuing in that direction.

    When I write this short report every week, I am also looking at my spreadsheet which has all the COT reports on it in consecutive column blocks so I can see the trends very visibly and sometimes I will mention if a certain trader has done the same thing for several weeks in a row on the long side and maybe doing something else supportive or differentiating on the short side and those becomes factors I use to make my educated guess as to where things are going.

    So, when I comment it is very interesting that overall the commercials only reduced their net short position by 4 million oiuinces and price dropped over a $1, I am looking at their total open interest divided by $35 and seeing that a few more days of like action and we could see price at $30 easily.  

    The more the speculators are willing for the price to go down without the commercials expending huge net short positions shows me that the speculators, overall, could be doubting whether to stay long in the face of opposition whether that opposition is from the commercials or from within themselves in the form of profit taking (sensing a top is in).

    Just some thoughts…! 

    • Andy,

      Forgot to mention how the totals are posted.  Notice on the commercials they have 93,188 shorts and 36,184 longs which is 57,004 net short.  I merely subtract last weeks net short total from this week to get the change differential then multiply by 5000 oiunces to get the result net short in ounces. 

  4. Marshall
    Thank you for your thoughtful explanation to my questions. I am still digesting it, but must admit you are quite a few jumps ahead of me!
    You are no doubt following the situation in the London Bullion Market Association, where there is such stong physical demand that there are delivery delays. There appears to be an interplay between the LBMA physical market, and the COMEX paper market. Bearing in mind that the London market is much bigger than the COMEX, it’s strange that the COMEX seems to dictate pricing. Have you done any research on this interplay, and does the weekly COMEX COT report have any statistical relationship to the weekly physical sales in London? I ask these questions because it would seem to me that the COMEX and the LBMA may well be working hand in glove behind the scenes, and are not opposing markets as would appear, but are in fact one and the same organization, pushing prices lower via the COMEX so that fellow member Bullion Banks of the LBMA can siphon up physical silver at cheape prices.
    Your weekly work on the COT is much appreciated.

    • Andy,

      I read all the articles where commentators make statements aboiut the LBMA and they have their inside moles who give them information on orders than have been placed or are going to be placed if price goes below a certain mark.

      It is hard for me to put a ton of stock into their articles as I view the LBMA like the black box it is. 

      Early this year, we were led to believe, by most of those same commentators, that there would be massive buying if price went below $33.  Well, price got down to something like $26.15ish after a spiked high of $37.58 in late February.

      We were told, all the way down, that price would not drop any further.  Every lower price level was accompanied by articles and interviews that a bottom was in and strong hands were ready to buy.  Once we got to that $26-27 level price languished for 3 full months.

      I find it interesting that no one writes articles telling us why there was not massive buying for those 3 months OR on the way down to that price area.  Did all those massive buyers forget about their price points and choose to wait to see where the true bottom was?  So many possible theories – so little time!  😉

      I do not have a grip on the interplay between the LBMA and the COMEX and to what extent it exists.  Whether during the LBMA fixes contracts are bought by the commercials based on those fixes is only guess work.  My guess is that is so but to what extent/percentage who knows…

      I choose to just look at the short term patterns and long term trends of the COMEX to make any decisions about options or metal purchases.  If I had placed faith in all those articles that started coming out at the end of July about price going to the moon then I would have much more money now!  But I did not as I was caught flat footed reading all those articles and did not act on the commercials buying longs one week before price took off in mid August.  I certainly did not forsee price rising to $35 from $27 and change and did not place any bets during the rise but have now in the last two weeks.  I think I am better at seeing price weakness than price strength but that is just my niche.  Can’t have everything!

      Overall, I really hate the idea of the closed, black box LBMA market where you cannot see the physical movements of metal and the price things are sold at.  No reports for the short term to make investment decisions.

      Somehow we are supposed to trust the “insiders” who leak information for the commentators who make their living writing newsletters?  I read them all but take them with a grain of salt when it comes to information leaks.

      Sorry to disappoint with no real insight into those interworkings! 

  5. Marshall
    Far from being disapointing, you have given me lots of interesting commentary to think about. I appreciate your candour, and agree with your sentiments – I also got caught flat footed by the way on the August jump. We are dealing with a very opaque and rumor driven market – notwithstanding, we soldier on in hope!

  6. Even if the commercials still increased their shorts to crush silver’s price, the premiums on physical silver is going to rise even more. Already at my local coin shops, it is now rare to find one ounces of pure silver bars, coins and rounds. The only thing that is available to buy right now are junk silvers.

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