Submitted by SD Contributor Marshall Swing:
Silver COT Report 9/14/12
Commercials sold off an incredibly massive -91 longs on the week and purchased a respectable -2,261 shorts to end the week with 46.13% of all open interest, an increase of +0.31% in their share since last week, and now stand as a group at 236,360,000 ounces net short, a MASSIVE INCREASE OF 11,760,000 more net short ounces from the previous week.
Clearly, the commercials were preparing for a massive raid on Thursday, until Bernanke dropped their pants by announcing QE∞.
This means that rather than the massive raid that was apparently planned for Thursday’s FOMC release by the cartel, they now find themselves with nearly a 250 million ounce net short position with the reality of QE∞ staring them in the face.
Everyone now will be buying the dips in gold and silver in order to protect themselves from the Fed’s official policy of currency devaluation to infinity. The cartel will have to cover these shorts at some point- expect this to begin in an orderly fashion, and potentially result in a short covering disorderly move to the upside in silver.
Large speculators wound up in the sell column as they unloaded -912 longs while picking up a miniscule -36 short contracts decreasing their net long position to 157,410,000 ounces, a decrease in their net long position of about 4,740,000 ounces from the prior week.
Small speculators bucked the trend of their larger speculative counterparts and bought up a massive 1,853 longs and covered -1,447 shorts for a net long position of 78,950,000 ounces an increase of 16,500,000 ounces net long from the prior week.
Commercials resumed adding to their short positions after several weeks of primarily long selling to rake in profits on this rise in silver spot.
We see the majority of open interest change in the small speculators who also happen to hold the least of the contracts by percentage. They bet long as they also unloaded, or were forced out of, a significant percentage of their short positions. They also bet right considering the FED’s decision, yesterday, to engage in QE3, though they should probably take profits and get out quickly. In the paper game, if you can make $1+ an ounce for a couple of day’s work then that is a success story.
If forced to take a position on what this round of quantitative easing is going to mean for the precious metals markets, my choice is not much. These FED purchases are aimed at buying up toxic mortgage backed securities and the money printed to acquire those filthy pieces of meaningless paper is not going to find its way into the metal’s markets. This is just another preparatory event to shore up some banks for the coming collapse storm later this Fall or Winter. If it was bond buying that would be a different ballgame but this is strictly toxic waste cleanup operations to spread the hazardous waste amongst the taxpayers like the fluoridating of the water of the masses.
My rationale is that the commercials would have gotten some advance warning and would have bought long but that did not happen. To further support this theory, the managed money did not bet long either. This could be because the commercials have bought short for seven straight weeks and they know a solid correction is coming. Take the Wednesday raid out of the picture and silver is up $1 since the FED announcement.
After the FED announcement, we saw 34,000 contracts (170,000,000 ounces) trade in just one hour. Price has been stagnant since then and leveled off at $34.70. Interestingly, volume has been heavy today in both silver and gold so let’s hope some small speculators are making some profits on all those longs they bought because by their actions everyone else thinks a raid is coming.
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: http://www.cftc.gov/Contact/
[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!