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Precious Metals
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Ed Steer and Ted Butler on the recent COTsThe Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday was pretty much as I was expecting/hoping for in gold, but silver was a monstrous surprise. In silver, the Commercial net short position declined by a stunning 10,029 contracts, which was more than double what I was expecting/hoping for. The new Commercial net short position is now down to 169,000 million troy ounces---a 50 million ounce improvement in one week. The Big 4 short holders covered around 2,300 short contracts. The '5 through 8' big short holders actually added about 2,000 contracts to their short position during the reporting week---and Ted's raptors, the small Commercial traders other than the Big 8, added about 9,800 contracts to their long positions. Ted estimates JPMorgan's short-side corner in the COMEX futures market in silver is now down to around 15,000 contracts. Not to be forgotten in all of this is the short position in silver held by Canada's Scotiabank. I would estimate their short-side corner in the COMEX silver market to be something north of 20,000 contracts. Under the hood in the Disaggregated COT Report in silver, the improvement in the Managed Money category was even bigger, as they sold 2,871 long contracts and added 8,925 short contracts, which is a swing of 11,796 contracts in just one reporting week! That has to be one of the biggest 1-week changes on record. And all of the above occurred on a price decline of about 50 cents! That was the shocker for me. There was absolutely nothing in silver's 6-month chart that indicated this level of change in the internal structure of the COT Report in silver---and I'll have more on this later. Of course, since the Tuesday cut-off there has been further improvement in the Commercial net short positions in both gold and silver---but particularly in gold, now that the 50-day moving average was pierced to the down-side on Wednesday. Ted figures that even with the improvements we've seen over the last three trading days, we're still around 30,000 contracts off our lows from about five weeks ago. And just eyeballing the 6-month gold chart, a price move of $30 to $35 lower from Friday's low tick should just about do it. Ted figures we're at the lows in silver already. I also detect the continued presence of a single big buyer in Silver Eagles from the U.S. Mint due to the large but erratic pace of reported sales. Whereas the Mint has been reporting regular but very low sales of Gold Eagles relative to sales of Silver Eagles, in addition days can go by with no sales of Silver Eagles, but with reported sales of Gold Eagles. Particularly against a backdrop of weak retail sales, the spurts in reported sales of Silver Eagles is notable. As I’ve remarked previously, it’s as if the big buyer is waiting for the Mint to build up a few days of production before placing a big buy order, rather than buy what’s produced on a daily basis. Also notable is that when one adjusts for the premium the Mint applies to Silver Eagles, more money is being spent on Silver Eagles than is being spent on Gold Eagles. Except for 2014, this had never occurred in the 29 year history of the Mint’s bullion coin program. Considering the low to almost non-existent collective investor sentiment towards silver, it is almost shocking that the Mint is selling more Silver Eagles relative to Gold Eagles than ever before, including 2014. - Silver analyst Ted Butler: 22 April 2015 http://www.caseyresearch.com/gsd/edition/how-central-banks-mislead-on-gold-reserve-reporting-lawrence-williams |
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