No Improvement Yet In The Latest Commitment of Traders Report

Ed Steer, editor from the Gold And Silver Daily Newsletter at Casey Research (subscribe here), commented on the latest Commitment of Traders Report which appeared on September 2014, covering the period from Tuesday September 2nd till September 9th. This is the futures positioning according to GoldSeek:

COT_gold_12_september_2014

COT_silver_12_september_2014

By Ed Steer:

I must admit that I was more than underwhelmed by yesterday’s Commitment of Traders Report.  Although the numbers were headed in the right direction in both silver and gold, they weren’t the big numbers that both Ted and I were expecting.  In a word, it was disappointing, considering the fact that we carved new low ticks in both metals every day during the reporting week ending on Tuesday, June 9.

In retrospect—and a closer examination of the price charts for the reporting week—even though there were new lows set every day, the salami slices were pretty tiny.

In silver, the Commercial net short position only improved by 2,342 contracts, or 11.7 million ounces.  The Commercial net short position is still pretty hefty at a hair under 30,000 contracts, or 150 million troy ounces.

In the Managed Money category of the Disaggregated COT Report, these brain dead traders continued to pitch longs and go short, which is what their black boxes were telling them to do—so that’s what they did.  In the latest report they sold 1,842 long contracts—and added another 1,457 short contracts—which is a swing of 3,299 contracts in total.

Ted Butler says that JPMorgan reduced their short-side corner in the Comex silver market by about 3,000 contracts—and he pegs their current position around 14,000 contracts, or 70 million ounces, just under half of the current Commercial net short position.  And I’d be happy to bet that Canada’s Scotiabank is short the rest—and more.

In gold, the Commercial net short position declined by only 5,752 contracts, or 575,200 troy ounces of gold.  The Commercial net short position declined marginally to 9.80 million troy ounces.

Ted Butler said that JPMorgan added a couple of thousand contracts to their long-side corner in the Comex gold market—and it now stands at 25,000 contracts, or 2.5 million troy ounces.

Without a doubt there was further improvement since the 1:30 p.m. cut-off on Tuesday, as the HFT boyz that work for JPMorgan et al continued to slice the salamis to the downside in all four precious metals.

Undoubtedly, this will manifest itself in next Friday’s COT Report, but after a disappointing report yesterday, I will not guess as to how much improvement there might be.  However, there are still two more reporting days to go between now and the Tuesday cut-off—and anything can happen between now and then in the silver market, which is getting more psychotic with each passing day.

Going forward, what should we look for? Ed Steer quotes Ted Butler, and we believe there is no better and relevant explanation:

Looking ahead, given the extremely bullish COT set up at hand, it is not unreasonable to contemplate the nature of the next rally, even as the last few price slices to the downside are observed. Specifically, will the collusive commercials rush to aggressively sell to the technical funds who will, most assuredly, be buying aggressively as and when prices climb above the moving averages. You don’t need an IBM 360 to figure out that the technical funds will buy on higher prices, just what will be the commercials’ reaction.

Many would contend that the reasonable bet would be that, of course, the commercials will sell as much as necessary to cap prices on the next rally because that has almost always been the case. While I can’t argue that might occur yet again, I can argue that commercial price capping will end someday and with it the silver manipulation itself. That day is unknown to me but its coming is certainty why I hold silver (and buy call options). – Silver analyst Ted Butler: 10 September 2014

 

Receive these articles per e-mail

Subscribe for the free weekly newsletter and receive 3 papers about physical precious metals investing