Marshall Swing: Commercials Preparing to Crash Gold & Silver!

silver crashExtremely interesting developments in the open interest in both gold and silver this week!!
In silver, we see the commercials going FAR more short and the large specs going far more long.  Really interesting is the price rise, yet the speculators, on the surface, are not buying up long contracts by the bucket  – but they covered so MANY short contracts that their net long position went skyrocketing upwards.  For the commercials part, both the producer merchant and the swap dealers added huge on the short side to the tune of over 12,000 new contracts total.
Notice the silver commercials added over 50 MILLION ounces net short!!
So, in my numbers world, with price rising, that tells me the commercials led the way and FORCED the speculators out of short positions.  Notice a very modest pickup of short contracts by the small specs.  Those guys know the top is near and they are getting ready to ride the rocket downhill as the commercials crash price in the coming days.

 

 

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By SD Contributor Marshall Swing:

In gold, we see very similar type actions with the commercials combined picking up an additional 16,000+ short contracts and they exhibit very strong short pickups on both the producer merchant and the swap dealers. 

 

Those bankers and their cohorts absolutely slammed the speculators by forcing PRICE to RISE!!!

 

However, notice the producer merchant selling over 8,000 LONG contracts, probably near the top for handsome profit I am sure.

 

Notice the gold large specs and all the longs they picked up.  If they do not sell them quickly they are going to get creamed once the banks crash the price.  What happens on those FORCED crashes is it happens so fast that when the spec’s contracts with automatic stops say SELL they get a very bad price because price falls so far so fast and at the same time the commercials force the price to fall they are buying longs at the bottom.

 

If you happen to look closely at the silver numbers you see massive short covering by the large specs and massive short selling (position increase) by the commercials.  On the surface those numbers do not appear to add up easily and are confusing.  Not to worry all the numbers balance out and what really happened in the process was far more buying and selling than the numbers actually show us.

 

Consider this, as the large specs are covering all those short contracts into the price rise in hopes they can save profit before price goes to high and all is lost the same amount of long contracts have to be sold to match the numbers of short coverings.  All those numbers are hidden to us but this goes on every week and the only way to truly understand what is going on is to watch the CFTC daily reports plus comparing those and the weekly report to the price charts for each day and the week.  But likewise, all those short positions taken by the silver commercials had to have the same number of short positions taken elsewhere.  Very difficult to follow unless one is immersed in the numbers for actual contract or option trading!
Reporting from the Caribbean island of Vieques and without my trading software to closely examine price movements, see you next week!
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COT Gold 2-18-2014
COT Silver 2-18-2014