By Marshall Swing:
Silver COT Report 11/9/12
Commercial paper added a large 1,787 longs on the week but also covered a very large -2,267 shorts to end the week with 45.63% of all open interest, a decrease of -0.75% in their share since last week, and now stand as a group at 248,390,000 ounces net short, which is a decrease of just over 20,000,000 net short ounces from the previous week.
Large speculators were forced out of a massive 2,552 longs and reduced 454 short contracts decreasing their net long position to 170,595,000 ounces, a decrease in their net long position of just over 10.4 million ounces from the prior week.
Small speculators sold off a huge 1,131 longs and interestingly added a significant 825 short contracts for a net long position of 77,795,000 ounces a decrease of almost 10,000,000 ounces net long from the prior week.
This is a rare week where we get to see very clearly, in the COT numbers, the manipulative power of the commercial net short positions.
Silver price took a massive downturn on Friday followed by equally massive upturn on Tuesday. What is so significant is that the numbers in both the large speculators and short speculators do not reflect massive long buying that agrees with that upturn on Tuesday. Were they even buying longs into this so-called rally? The answer is yes but they were probably late comers to the rally and during the down turn on Friday probably sold far more longs than we see in the numbers so their long buying on Tuesday does not even register or come close to breaking even for the close of the period Tuesday afternoon. I’ll try to explain…
In the aggregated commercials we see two equally impressive numbers – heavy long buying and even heavier short covering. True to their mandate, this was a classic short covering price raid followed by heavy long buying while at the same time the speculators were stunned trying to figure out if a bottom was in the cards. Yes, the bottom was in but it is the bottom that has been set by the commercials not by the market.
What we see in the chart from Sunday night to Monday morning is a hard fake where price rises a little then goes down about .40 only to be followed by significant volume with a slightly upward price action on Monday morning. This is where the commercials buy all their longs while the specs are buying shorts. Notice the shorts bought by the small specs. What the commercials effectively did was get the speculators to believe the bottom was not in therefore they bought shorts (while the commercials are buying the other side of the bet long). By 12 noon on Tuesday, these commercials have the speculators believing there is a long rally going on and they dive into the market buying with both hands only to get slammed down on Wednesday, a long stop price raid, followed by price drifting upwards ever since. The commercials, mostly the swap dealers, are going to make nice profits off these longs they got at the so-called bottom.
To summarize, the price raid was so vicious the speculators were stunned and did not comer even remotely close to recovering their prior numbers on Tuesday before insult to injury was added during Wednesday’s price raid.
The most important data point, I believe, of this COT is the producer merchant numbers. Net change wise they were insignificant. They even added a little to their net short position above last week’s numbers. They are ready to pounce!
The commercials fully control price going down and price going up and this is clear data on how they do it.
The manipulative net short tag team match continues…
As always, for your convenience, if you would like to contact the CFTC and express your views on the commercial trader’s unfair dominant short position, I have provided you their phone numbers and I hope earnestly that you fill up their phone lines: http://www.cftc.gov/Contact/
firstname.lastname@example.org Chairman Gensler
email@example.com Commissioner Chilton
firstname.lastname@example.org Commissioner Sommers
Somalia@cftc.gov Commissioner O’Malia
email@example.com Commissioner Wetjen
firstname.lastname@example.org Director Meister
See you next week!