Still Struggling With Silver Open Interest (updated for new CoT)

Maybe you can help me to make sense of these numbers?

I think you know that the current open interest situation has me perplexed. First of all in gold, since last Thursday, price has fallen by over $26 yet total OI has risen by over 6%, from 420,766 to 446,274. So, who is shorting so much that price is falling? Perhaps more importantly, who is on the other/buy side of those trades? Unfortunately, the deliberately opaque CoT will provide only a few clues.

But what really has me bugged is the OI of silver, specifically since late 2010. Why then?

  • QE2 was announced in early November of 2010.
  • It began in December and proceeded along at approximately today's QE∞ pace of $85B/month until June of 2011.
  • Silver rallied through November and December 2011. 
  • It corrected for three weeks in January 2011 before stopping at "Turd's Bottom".
  • It then rallied through March on speculative buying.
  • It spiked in April as fears of a "commercial failure" sparked Cartel short covering.
  • In late October of 2011, MFGlobal collapsed and took with it nearly $2B in clients assets as well as the integrity of the CME and the futures markets as a whole.
  • When QE2 ended in June of 2011, price was near $35. When QE∞ was announced in September of 2012, price was still near $35.

So, while keeping in mind the points above, kindly consider the data below:

DATE   PRICE   LSLONG   LSSHORT​   RATIO   COMM LONG     CARTEL SHORT   RATIO   TOTAL OI

11/2/10   $25       52,625         12,834         4.1               31,152                     87,200             2.8         158,633

1/4/11     $31        40,483        10,488         3.87            29,598                    79,349              2.68       136,931

1/25/11    $27       38,699        10,473         3.69            29,818                     72,964             2.45        125,229

3/29/11    $37      47,764         10,625         4.49            32,587                     87,882              2.7         138,486

4/26/11    $49      43,078         18083         2.38            35,763                     78,297              2.19        143,341

So, what do we see here? What jumps out at you? For me, it's:

  • The remarkably steady LargeSpecShort position. Steady, that is, until the 70% spike in April of 2011.
  • The consistency in the size of The Cartel long position, which only increased in the final days of the rally.
  • The Cartel gross short position was just as large in November at $25 as it was in late March at $37. In fact, compare the entire entry of 11/2/10 vs the entry of 3/29/11. The only changes are that total OI has fallen by 20,000 while price has risen by nearly 50%. Hmmmm.

What happened next is, of course, market histoire. The Sunday Night Massacre, five margin hikes in nine days, QE2 was replaced by Operation Twist, another 30% beatdown in September of 2011 and, of course, the collapse of MFingGlobal.

Now look at this. After a bottom last summer, price began to rally in advance of the QE∞ announcement in September. Here's where we stood then:

DATE     PRICE   LSLONG   LSSHORT​   RATIO   COMM LONG     CARTEL SHORT   RATIO   TOTAL OI

9/11/12     $34        41,371         9,889         4.18             32,206                   79,478               2.47       121,050

Picking up where we left off in 2011, what has changed? Not much.

  • The LargeSpecShorts are back to the average, around 10,000.
  • However, the LargeSpecLong, CartelLong and CartelShort categories are virtually unchanged.
  • And the total open interest is down by 20% or so but you'd have to expect that, post MFingG.

And now look at this, the CoT from last Tuesday:

DATE     PRICE   LSLONG   LSSHORT​   RATIO   COMM LONG     CARTEL SHORT   RATIO   TOTAL OI

2/5/13      $32        42,449         6,588         6.44            46,293                    98,239               2.12       151,512

Now what jumps off the page at you? Could it be this?

  • Since the announcement of QE∞, total OI has risen by 25% but price has fallen by $2.
  • LargeSpecLongs are pretty much where they've always been, in the low 40s.
  • LargeSpec Shorts are way down...to levels never seen before...but that just happened last week and I'm not yet sure what to make of it. A reporting error or reclassification?
  • But get a load of The Cartel long and short positions. The true outliers. They've added 14,000 longs and 19,000 shorts since last September.

So what the heck does all this mean? I don't know. I wish I did. The latest LargeSpec numbers and ratio are such an aberration that it suggests a sharp selloff is forthcoming to bring the net long ratio back to within historical "norms". But if that were to happen, it would likely have minimal impact on the comparative Cartel long and short positions and that would seemingly be where all the action is. And why the heck isn't price rallying? The Fed is printing money at the same pace as early 2011 but, instead of rallying, we're getting a selloff. Could this current selloff be an event similar to the selloff in January of 2011 which preceded a 3-month rally from $27 to $49? Back in January of 2011, The Fed had been printing for a month yet price was inexplicably falling and angst was very high. Sound familiar?

So, anyway, this thread is intended for your feedback and analysis. I'm making it a "sticky" in order to bring it to your attention. Comments on this topic only, please. Distracting comments on politics and chemtrails will be moderated.

I look forward to reading your comments.

TF

4:00 pm EST Friday UPDATE:

The new silver CoT is in and it's a DOOZY! Unless JPM can crash price down through $26, I highly doubt that they can shake out very many of the extraordinarily large Cartel gross long position. IF THAT'S THE CASE, this forced beatdown isn't going to go much lower.

For the week, the LargeSpecs reduced their net long by 3,700 contracts and this drops the net long ratio back to a more normal 4.94:1. And the small specs dumped 1,400 net longs, too. All of the action was again in the "Cartel/Commercial" space. They added an astonishing 5,889 longs!!! This brings their total to a has-to-be-a-misprint 52,182. Look back up this post...That is anywhere from 50% to 90% higher than the gross long position they held in 2011. All of this buying precluded any covering by JPM et al. They actually had to add naked shorts...another 740...bringing their total to the 2nd-highest I've ever seen at 98,979.

No wonder we saw the beatdown from Wednesday through today! Price has fallen by $1.18 since the survey on Tuesday but what have they accomplished? Of course, it's impossible to say but I'll leave you with this. At the survey, price was $1.18 higher and the total silver OI was 152,817. As of last night, total OI had grown to 154,364. Since OI was alos growing while price was falling during this last reporting week, the further growth in OI since suggests a continuation of the trend. Most likely, specs have continued to sell and get short while The Cartel longs have continued to grow.

WOW! Get some rest this weekend. If you thought this week was wild and crazy, next week may push you over the edge! It appears that we are witnessing history, in real time.

TF

DATE     PRICE     LSLONG     LSSHORT​     RATIO     COMM LONG       CARTEL SHORT   RATIO   TOTAL OI

2/12/13     $31          40,205           8,133           4.94              52,182                       98,979               1.90       152,817

345 Comments

jimbo's picture

Fleckenstein

Fleck always says that he can't get any tradable ideas from this data. He knows his stuff. You should have an interview with him and forget your reservations...

You are on the same side after all. Just an idea.

Ilya Repin's picture

I dont know but what i do

I dont know but what i do know is when the SPX tops out the Metals will bottom out and reverse violently. Big money is playing everyone and pumping the market pump and dump fashion.. Its just the opposite in Silver they are just selling to themselves and hoping you will sell to them too. When theyve had enough they will flip and let the stock market tank and ride the PM wave.

I do however feel something is going to blow very soon and I could make a Tech case for a Bottom being in today, however i could have also made a case for this yesterday albeit a less perfect one. Either way, Im not selling physical and will buy more Monday. also placing small longs down here with tight stops is not dangerous with great Risk/Reward

On a side note,

1) if Silver Standard SSO Bottomed today it would be perfect Tech 127.8% FIB same for XAGUSD

2) The JPM/SILVER spread is also at historical levels that bring action. Either JPM will crash or Silver will lift off (or both)  Go check the charts. I will put on a hedge trade of long XAG and Short JPM when/if it hits 51-3. Might not get there though as it looks topped today.

My money is we break free within two or three weeks, between then and now i dont know and dont really care too much.

 

Dagney Taggart's picture

Turd?

What if the cartel is simply increasing their short contracts until they are short 1,000,000 years of world production because the CFTC has a yeast infection and the Cartel can borrow free fiat forever FFF(tm) to short, short, short until they can get bailed out by some "unforeseen"wink future event they can orchestrate with their MIC criminal friends that will void the short contracts?

In other words, they are pulling an inverse Hunt Brothers except the Cartel's acts are deemed necessary for your protection.

Please evaluate for possibility, not probability.

PS. And doesn't JPM have a 60-day Cease and Desist order requiring shorting the metals using the left hand instead of the right or something by March 18th or so? What was that about?

Byzantium's picture

@ SRSrocco

"we keep hearing on all the BULLISH sites that there is a real tightness in the physical silver market.  On the other hand, we keep getting a build in the Comex Silver Inventories.  How can this be?"

My theory is that JPM have been cornering all the physical available, even the silver earmarked for eagle production, and as a consequence, what everybody sees is the appearance of a shortage. I believe JPM are stacked up to pull off the big smack-down.

pforth's picture

Doubling down on shorts...

A common bank/hedge fund practice is if a position that you are in starts to go against you, keep doubling down until you can get out at a profit.  If you've got deep pockets you can win 99% of the time (of course the 1% losers hurt).

With the short position getting bigger and bigger, this feels a bit like this strategy.

question's picture

Can There Really Be

any information obtainable by mere mortals that would allow understanding of these *expletive* markets. If anything useful has been extracted by this valiant attempt to decipher COT reports I must have missed it.

It seems all we have to work with are lies and black boxes.

That being said, Andrew Maguire apparently scores repeatedly. Mechanical method seems to deal with what is, rather than trying to understand and analyze. If I was able I'd give it a try but then if pigs could fly bacon would be harder to come by.

WTFDIK

philipat's picture

CoT

Perhaps, like much economic data today, the CoT might be massaged to obfuscate reality? After all, it's not like it's audited. And even if it were......

Just sayin.

Two Gun Tobin's picture

Two Gun Visits the LCS

Walked into my favorite LCS.  I watched while the dealer counted out $500 dollars face value junk silver to one customer. 3 people in the store all waiting to buy.  Stock was thin.  He said that it had been like this for the last 3 days.  I consider this manipulation of price as a gift from above.   So.... Go Cartel!   lets knock it down to under $30 ..... I dare ya!

cpnscarlet's picture

Silly Turd...

Still trusting any published numbers. Thought you would have learned by now.

department of truth's picture

It Means

The Cartel is getting ready to sell 5 years of global silver production in 15 minutdothan they can cash in their shorts and go long.  Who is going to stop them? 

Xeno's picture

Good Company

Don't worry Turd. you're in good company. Neither Harvey nor the CFTC know eitherwink

It's a paper illusion.

Liars figure and figures lie.

It doesn't seem the CoT can be deciphered unless aggregated with SLV and LBMA data to expose the criminal three card monte world class scam.

Markets can remain irrational longer than you can remain solvent.

Criminal and malfeasant leadership can remain until the populace is locked and loaded.

Jasper's picture

Short paper, long physical?

In musical chairs, if you can reserve your seat early, you win.  So dance around the room, when the music stops, you simply calmly walk to your chair with the reserved sign on it.

The derivatives market will probably end with a system failure, so JPM likely won't be obliged to pay up on their massive paper short positions anyways.  At the very least it will be a pennies on the dollar settlement.  So the cartel simply keeps doing their job at the behest of the fed, keeping the dead cannery fluttering around the coal mine with strings, while the air slowly becomes unbreathable.  At the same time they arrange their own escape into physical metal.  BM is no dummy!

On January 13th, David Bensimon predicted a 2008-like drop into the middle of April.  Equities dropping sharp and fast.  Copper down to 2.60 (Oil, TSX, S&P, all down; 20% washout to the downside, then 70% up, so your July Silver call at 35 should be just fine, Turd)  

https://www.smartstox.com/analysts/david_bensimon/01-13-12

If Bensimon is correct and the markets correct down, I expect Silver and Gold will sell off as everyone is desperate to raise cash like they did in 2008.  Perhaps the cartel agrees with Bensimon, and they are planning to profit on the way down and attempt to cover their paper shorts.

It is dangerous waiting for lower prices, they might not come.  On October 9, Bensimon predicted Gold at $1,440 on Feb 13 which was yesterday.  He also predicted Silver possibly hitting $22.00 on Feb 13.  It never reached that low . . . yet.

I've stopped trying to figure the markets out.  I think it is simply crazy to short Silver from this level,  considering the massive amounts of paper being created; just look at the Yen.  Buy silver or gold if the price is lower than last week.

Dyna mo hum's picture

Dagney

Yeast infection CFTC ? I never considered that angle.

robov's picture

When Those With the Experience Are Confused?

What does that say? Turd's miffed, Ted Bulter who is supposedly an expert on the silver manipulation can't figure it out, Ed Steer can't figure it out, Harvey figures there are strong handed longs that just can't be shaken even with the beatdowns and OI rises. Then you have Sprott and others over at KWN talking about supposed tightness in the market which will cause an imminent and massive short squeeze in silver yet 18 million ounces shows up overnight at the SLV and conveniently the day after the cutoff for short interest in SLV (just coincidental timing...hardly) thereby allowing the cartel another 2+ weeks before we ultimately find out about the 10.5 million drop in SLV short interest. Looking at the Net Dania daily gold chart shows a slow but steady stair step decline off the late September highs of '12 while silver has a much different pattern that appears to rebound stronger off each sell off.  The corruption is in the fact that you can write 1,000 or 10 of thousands of paper contracts short with absolutely no product to back the shorts. That's where the unfairness lies. Futures which started out with the best of intentions have become nothing more than a means for the corrupt to control physical asset prices with no physical to back up those contracts.  I guess time will ultimately tell. A friend of mine that has traded the Venture exchange for more than 30 years keeps telling me that the COT structure does not show the whole picture and always brings up the fact that JPM is likely hedging with options or some other mean. If Ted who has 30 or 40 years in this can't figure out what is going on? Where does Occam's Razor fit into all of this.

The most useful statement of the principle for scientists is
"when you have two competing theories that make exactly the same predictions, the simpler one is the better."

http://math.ucr.edu/home/baez/physics/General/occam.html

Pulled this Quote off of Jesse's blog;

“Appear weak when you are strong, and strong when you are weak.”

Sun Tzu, The Art of War

Which then made me think of this quote from the Apostle Paul in 2 Corinthians 10 That is why, for Christ’s sake, I delight in weaknesses, in insults, in hardships, in persecutions, in difficulties. For when I am weak, then I am strong.

Hmmm, words of wisdom.

Also from Jesse;

Why the big show of control over the markets? It is fairly obvious if you watch the daily action on the tape.

I *think* that the financial system is quietly unraveling behind the scenes again, and that at some point this great complacency is going to break, and hard. But the gaming will continue until something provokes a change in the short term equilibrium, which I believe is false.

I will not be surprised to see a final big move to run the stops to the downside, and take additional shares and units of paper claims before the markets break free.

Texas Sandman's picture

Let me make it simple for you.

On one side you have JP Morgan and its unidentified client is the same one that backstopped its acquisition of Lehman Brothers and its manipulative silver short position.  Its unidentified client has a device called a printing press with which it can cough up money at will, leverage it 10:1 (or more) and backstop short sales into a tiny market.  And they can create the product they sell into that market out of thin air.

These guys can swat around the silver market like a ping pong ball at will.  They have the regulators in their pockets & if things get too hot for them, they announce, "you can only sell silver futures but not buy.".

And on the other side, there's you, with a very finite, very limited account.

Get it?

ancientmoney's picture

@Jasper re: lower silver prices . . .

"It is dangerous waiting for lower prices, they might not come."

--------------------------------------------------------------------------------

Agreed.  With silver priced currently at about 1/3rd its real value by most measurements, waiting for lower prices, or worse, shorting would not seem smart. 

Not that prices can't go lower.  They can push paper prices anywhere they want.  The danger to them of doing that is loss of physical as prices drop, to strong hands. 

The danger to us in waiting, even if prices do go lower, is we may not be able to obtain all we want--or, the premiums will make up the difference anyway.

Gold Buffalo's picture

Silver on script and headed lower

Will soon make new lows for the year.  This guy appears to know what he is talking about.

http://www.marketanthropology.com/2013/02/on-script.html

ancientmoney's picture

@Gold Buffalo . . .

As we know, the lower silver goes, the more physical gets taken off the market.  Their objective is to keep silver contained, so few new buyers enter the market.  They can't take it too low, though, or risk the takeoff of too much physical.

When they are ready, meaning when there is not enough physical to continue the charade, they will short the hell toward zero, cover, then halt trading.

Anyone without physical then will be $hit out of luck.

Puck T. Smith's picture

Summer Soldiers

I'm not naming any names because I'm not picking on anyone in particular, but in the past few days several people have said, in effect, if things don't break to the upside soon I'm cashing in.  I've heard people say they were selling their stack to pay their bills.  I've heard people just flat giving up.  Do you think the stock market is going to save you? What were you thinking when you got so far in that you couldn't pay your bills if the metals didn't increase in value over the short term?  Are you saying that the laws of economics can be repealed? Did you guys not think about what you were doing?  Did you think you were going to be millionaires by now?  Are you such gamblers that you'd spend your kids' college money on a blackjack hand?

I've probably spent more than I should have.  I loaded up on silver between 30 and 40.  I got out of my 401(k) and bought gold right before it took off to ~1,900, only to see both fall back below what I paid.  I'm still in the hole, but I never, ever spent so much that I could not pay my bills every month or keep enough cash in the bank to buy another ten year old car in case the one I'm driving dies.  If silver drops to $2 and gold goes to $500, as long as I have my job I'll be OK.  My whole life up until I started stacking was pure grasshopper.  I'm an ant now and winter is coming on.  

This is real life, not a TV show.  The wheels are coming off the cart.  The world is going to be changing in ways nobody can possibly predict.  The 20th century was just a blip in human history.  A grand experiment that failed.  Democracy is a sham, fiat money is an illusion and reality is going to reassert itself.  And you think you can plug yourself back into the Matrix?

Do what you think you've got to do.  I'm pressing on.

ReachWest's picture

Infection

I'm think Dagney might be right - the CFTC may have a yeast infection. That's the probably one of the more viable explanations for their behaviour (lack of action) I have heard to date. indecision

jezfry's picture

Any stash left?

A few months ago there were well documented large withdrawals of silver from global inventory, recently SLV has been a source of physical for the cartel, last month physical destined for eagle production may have gone the same way - all last ditch desperate attempts to cover shorts or find enough physical for those taking delivery in the paper market.  

The question now is do they have a stash big enough for one last big take down enabling them to cover their shorts, or are they clean out of physical? I guess we will find out in the days/weeks ahead. There is no clarity in the COT statistics so we are left guessing.

One thing IMHO is certain, whether or not we have a last washout in the near future the price is about to move significantly higher because even highly manipulated and controlled markets do what markets do - find fair value.  The cartel has their back against the wall, they are out of silver (or close to it) and fair value is way, way higher from the current price.

Ilya Repin's picture

@Gold Buffalo

www.marketanthropology.com is a USD pearmabull. i mean seriously.

And if you follow his Silver updates you will see he changes his chart scales week to week to fit his bias.. really quite pathetic.

Screen+shot+200-w02-14+at+10.03.04+AM.pn

this chart from the link you posted.

errr.. it looks like Gold and AUD have done most of what they are going to do and will go up from here. not down.. this guy suggests this is a bearish chart.. LOOK AT IT

nuts

Turd Ferguson's picture

And chew on this...

MODERATOR

After losing another 3 tonnes today, the GLD shows an "inventory" of 1,322.97 mts. This is down 27 mts YTD or almost exactly 2%.

So, at a time when there is negligible physical for sale...anywhere...the GLD has been lightened by 27 mts, or 868,000 troy ounces.

Kcap's picture

@Turd

So, what's your take on the reduction in GLD mts?

Do you really think its physical leaving, or games that somehow support their linked derivatives to stay afloat?

FWIW...I think the Pope stepping down is part of a much bigger event that will include the ultimate in G/S wars.

Kcap

maravich44's picture

for Turd(s)...

.

DayStar's picture

Harvey's Up!

I think a lot of regular readers of Main Street are unfamiliar with the resource that we have right here on TFMR that provides great information regarding the physical gold and silver trading statistics on Comex. The following trading statistics are regular features of the Harvey Report:

  • Closing Comex gold and silver prices.
  • Total, February (Gold), March (Silver), and April (Gold) Open Interest.
  • Comments on the current day's price action
  • Number of contracts traded in gold and silver on Comex.
  • Inventory movements among dealers, customers, and the various vaults in gold and silver.
  • Today's delivery notices, the amount served month to date and the remaining amount to be served.
  • Changes in the delivery month OI due to presumed cash settlements or publishing of previously sequestered OI.
  • Commodity prices for oil, wheat, corn, hogs, copper, and cattle; the Baltic Dry Index, US Treasury 30 year interest rate and the dollar versus the Euro basket currencies.

Of course there is the usual survey of physical gold and silver news and political and paper news that affects bullion. The news is condensed into salient bytes that save time and highlight important points.

In today's Harvey there is a summary of the World Gold Council quarterly report.  Japanese households gold holding rose for the first time since 2005.  Soros Fund Management raised its gold allocation and made $1 billion in profits betting against the yet.  It's amazing how Soros seems to have this uncanny "intuition" about what currencies are going to do.  Darryl Robert Schoon attributes the doldrums of gold and silver to 1) Western bank price suppression and 2) the Chinese strategy to purchase PMs at the lowest price.  Jim Sinclair says the bankers are demonic.  China is set to launch a gold ETF.  South Africa's gold output continues to decline.  Barrick lost $3.06 billion in 4th quarter 2012.  Ted Butler says JPM shorted 10.5 million oz of SLV in addition to its massive Comex short.  All this and more on...

The Harvey Report!

http://www.tfmetalsreport.com/comment/271540#comment-271540

DayStar

Puck T. Smith's picture

@DayStar: I appreciate what you are doing

I used to read Harvey every day.  Or at least I tried to.  Between the formatting of that site and the often opaque style of Harvey's writing--he seems to assume everyone is well versed in all the terminology and intricacies of the metals market--I gave up.  You are making it readable and palatable.  Thanks. 

Adolf_Hitler's picture

Two Points

1. The Comex has added 2 warehouses for silver since 2010: JP Morgan Chase Bank NA and CNT Depository. As a result, it is quite illogical to compare today's 160 million oz inventory with the 100 million directly. One thing I want to point out is that the registered silver rests at around 37 million and the number was around 48 million back in April 2010.

2. Turd has considered all the commercial longs to be cartel longs. However, industrial buyers are also considered commercial longs by the CFTC. Ergo, the physical silver market may indeed be quite tight as industrial buyers are buying from the Comex.

Turd Ferguson's picture

Excellent points, Adolf

MODERATOR

I hope that Eva is being nice to you this Valentine's Day.wink

Turd Ferguson's picture

Just as Andrew Maguire told us

MODERATOR

GLD is spun as a flywheel for immediate delivery of physical.

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