Good morning to you all:
Before going into an commentary, I would like to see the COT report released at 3:30 yesterday afternoon.
I will comment on this at the conclusion of the report:
OK: in gold with respect to the Long speculators, we see a slight decrease in their longs and a slight increase
in shorts, so really no real change there.
With respect to commercials, we see again a small increase in their short position.
The small speculators who generally get it wrong, increased their net short position by a large 5800 contracts.
So in plain English, the suppliers of the paper gold were the small speculators and to a smaller margin, the
large commercials. Thus the smaller commercials are bailing out big time as they see the writing on the wall.
Lets go to silver:
First of all the large speculators on a net basis saw very little change. However the commercials again increased
their short position by a rather large 1297 contracts creating a massive shortfall to them.
They were again joined by the small speculators who went short an additional 1499 contracts.
So in a nutshell, the silver was accumulated by the longs and the paper silver was supplied by the larger
commercials and by small speculators. As in the gold COT smaller commercials are bailing out.
I felt it is important to witness the trend. Over the past several weeks, we have witnessed the commercial shorts
rising but in smaller increments as their junior cohorts decided to not play along with their larger opinion leaders.
The total short interest in silver is around 685 million oz. One bank holds over 40% of that shortfall and that
bank is JPMorgan.
In gold, the total short position is around 51 million oz and JPmorgan and HSBC have the majority here is well.
Lets go to yesterdays events:
Gold fell marginally by 2.20 to 1057.60. Silver on the other hand decided not to do her thing and rose by 18 cents.
This is as of 1:30 pm when comex closes. Do not pay attention to the access market, as the bullion banks try to
"paint the tape". They are trading amongst themselves in order to achieve the impression that gold and silver
are falling as the Dow retreated.
Open interest on the gold comex fell by a large 10,000 contracts to 506998. If you remember on Thursday, gold
did a complete reversal for the second day in a row. I guess that we had a mixture of some longs and certainly
some commercials remove some of their shortfall.
The silver comex OI also fell by 1634 contracts to 135,700. Again weaker longs vacated but so did some of
This is why we view the COT report to get the trend. And the trend is a continual liquidation by the smaller
commercials on both silver and gold.
Lets get some numbers on the days events: