Smash In Silver “Has Some Room to Run, Gold Smash “Hasn’t Even STARTED YET”

I would guess that the smash in silver has some room to run, probably a lot of room.
Despite the price drop during the reporting week, the hedge managers continued to move LONG some 9K contracts, and the commercials moved short some 3.5K contracts.  
This is highly unusual.
They are nowhere near the record extreme positions that they were in silver, but the net short positions of the commercials and net long positions of the hedge funds are still quite substantial by comparison to most of the last 5 years, with plenty of meat for a smash.  However, they are still behaving as they do during increasing prices, and given the price action since then, it is clear that any possible gold smash HAS NOT EVEN STARTED YET.


From SD Reader FK:

I spent two cups of coffee looking at the CFTC COT this morning (night time for those in the States.)

The data was through the 25th.

In silver, the hedge funds were already record long silver the week before, and this report showed they only reduced that by about 10,000 contracts when the price declined for several days and broke through the 200 day moving average on the 25th.

They have undoubtedly reduced it more since then, but daily trading volumes have been significantly below normal despite significant further price declines, quite curious IMO.

I would guess that the smash in silver has some room to run, probably a lot of room.

That guess is in part due to the action in gold.

Despite the price drop during the reporting week, the hedge managers continued to move LONG some 9K contracts, and the commercials moved short some 3.5K contracts.

This is highly unusual.

They are nowhere near the record extreme positions that they were in silver, but the net short positions of the commercials and net long positions of the hedge funds are still quite substantial by comparison to most of the last 5 years, with plenty of meat for a smash.

However, they are still behaving as they do during increasing prices, and given the price action since then, it is clear that any possible gold smash HAS NOT EVEN STARTED YET.

With the gold price hanging just above the 200 day moving average, and the 100 and 50 day averages nearby, it would seem an ideal set-up for gold to get smacked as well.

Thus, we are in cash, having sold gold longs a bit too early at about $1260, and expecting gold to join in the smash soon.

My personal confidence level is no longer adequate to short it, however.

We quite shorting some 6 months ago, but for the four years prior to that, shorting was as profitable as being long.

During that time, the number of weak hands being used and abused by the commercials has been steadily decreasing, and the number of core longs has been increasing.

It will be interesting to see how big the swing is in this cycle, but guaranteed it will not be the 100,000 in silver and 150,000 that we used to see in gold, no matter how severe the price smash.