By SD Contributor Marshall Swing:
Gold & Silver COT Report 12/15/12
In silver, Commercials added 1,105 longs on the week and 514 shorts to end the week with 48.19% of all open interest, an increase of 0.45% in their share since last week, and now stand as a group at 289,615,000 ounces net short, which is a slight decrease of just under 3,000,000 net short ounces from the previous week.
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Large speculators removed 1,656 longs from their total and added a mere 116 short contracts increasing their net long position to 197,500,000 ounces, a decrease in their net long position of almost 9 million ounces from the prior week.
Small speculators added 510 longs and covered 671 short contracts for a net long position of 92,115,000 ounces an increase of almost 6,000,000 ounces net long from the prior week.
This was a pretty boring reporting period in silver. Overall price started the week at $32.92 and close at $33.06 but there were quite some ups and downs though we have not seen so little change in open interest positions in almost 1 year.
Last week I had predicted a drop in the silver price and though we did not get the drop during this past COT period we got it about 24 hours later. It was not simply a raid, however, as price rose dramatically and almost instantaneously to $33.87 on Wednesday only to begin its fall moments later and keep falling well into Thursday to a low of $32.28.
Since the COT close on Tuesday afternoon, the total open interest has increased by near 1,100 contracts which may mean speculators taking short bets the price is going lower but my guess is it is also speculators who are taking the long side of those bets and thinking a bottom is in place. We will not know until next week’s COT but should understand even after a raid of this magnitude the commercials still possess a tremendous net short position and can take price lower if desired. As we approach the holidays it is typical that trading grinds to a trickle on the COMEX so do not be surprised to see much lower prices.
On Wednesday, there was a huge short covering raid on gold as we see the producer merchant reducing their short shares by over 10,000 contracts.
Overall, the numbers tell me that gold instigated the Wednesday raid during the COT week but after the period it was the silver commercials who took silver to the cleaners with gold following. When you compare the gold to silver ratio, the latest price drop was far more dramatic in silver than gold and started with more power and precision. It’s almost as if the silver commercials waited until their gold counterparts had completed their work this past period and then unloaded on silver speculators. If you compare the gold and silver charts from late Wednesday through late Thursday of this week you will see silver dropping about $1.60 and gold dropping over $25.
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/
[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