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/index.htm and email addresses as well:

 

ggensler@cftc.gov  Chairman Gensler

 

bchilton@cftc.gov  Commissioner Chilton

 

jsommers@cftc.gov  Commissioner Sommers

 

Somalia@cftc.gov  Commissioner O’Malia

 

mwetjen@cftc.gov  Commissioner Wetjen

 

dmeister@cftc.gov  Director Meister

 

See you next week!

 

Marshall

  1. They’re covered, don’t worry.  My theory is- they aren’t in this to make money on their PM contracts.  That is a service they provide to the fed/treasury, from whom they get enough digits in the slush fund to cover any major effups.  They also get immunity from regulation, a derivative operation they make billions on, EBT card issuance, lots of income streams from every direction. They don’t need to make money on PMs, they need to hold the line against real money and US.  IMO.  It makes sense, their position would be a massive debacle for anyone but them, but they’ll be OK like always. They may throw some member of the pack under the bus, and the big rats will get to pick up their assets (cheetos) on the cheap.  People are saying MS is going down, I don’t know.  Another ‘Lehman’ moment coming up?

  2. Here’s the deal… they are short 250 million ounces.  That means that since we were at $30ish, they’ve lost a billion dollars (more or less).  Well they are literally printing more than that every DAY now!  And we all know that the banks who are short are first in line to get the money. 
     
    Do we really think that the commercials got it wrong? That they didn’t know what Bernanke was going to do?  No this is purely a holding action, trying to prop-up the perception of the value of the dollar as long as possible.  The printed money more than makes up for any losses.

  3. I was totally expecting a no QE from the Bernank on thursday. Look JPM owns the majority of the stock of the FED. You are telling me they do not know what is going on? Can they just be pulling people in then smash it one more time in a big way before the position limits come in on  Oct 12th? something seems fishy to me. 

  4. The fact that they did QE3 with infinity written into it, says to me that the end is near. Because they can’t do interventions with HUGE effects unless they have announced ‘honestly’ the capacity to do those things. And they would not announce new capacity (thus giving us all a clue as to their real intentions) if the time of using that capacity was far off. Therefore, to me, this says the end is near. But, until that time, they want things to slide down somewhat controllably. Greg Mannarino said in his video yesterday that Obama will use the new inflation (which will happen now) as a platform for his campaign for re-election. And after that? … maybe the dollar collapse is set for the same date as the ‘end of the world’. This Mayan BS has appeared in every country in numerous books, TV, internet, MSM until it is painful to see one more time. But this uber-level of programming is reserved for VERY important dates, which they want EVERYONE to know about. The 1981 movie Rollover shows the dollar final collapse taking 2 days and beginning 19 December 2012 – this is very suspiciously close to the ‘end of the world’ on 21 December 2012 (which the MSM tells us is not the end of the world, but instead a ‘new beginning’, .. aaa, ok). For sure, some serious shit will happen that day, and the dollar collapse could possibly be it.
     

  5. If the commercials added shorts and got rid of longs, then I guess that that they are betting that silver will go higher especially with QE infinity. Anyway, wow! American Silver Eagles are more expensive than Canadian Silver Maple Leafs!

  6. It looks like that commercials are thinking that silver will gain a lot soon more which is why they trade all their longs for the shorts especially with QE infinity. I’m amazed that American Silver Eagles are more expensive than the Canadian Silver Maple Leafs.

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