A Look At The Latest CoT

321
136
Sun, Aug 14, 2011 - 10:55am

The "Commitment of Traders" report is issued every Friday. It is a summary of positions from the previous Tuesday. Since it doesn't tell us about the most recent three days, it's not always the easiest thing to interpret. However, this week, several things jumped out at me and I felt they should be addressed.

First of all, Harvey always does a bang-up job of reporting these numbers every Saturday and he does it in a format that is readable and understandable. I suggest you check it out every weekend:

https://harveyorgan.blogspot.com/

I lifted the spreadsheet below from his site so that you have an easy reference for this post.

Gold COT Report - Futures
Large Speculators
Commercial
Total
Long
Short
Spreading
Long
Short
Long
Short
259,388
55,815
14,425
163,472
412,678
437,285
482,918
Change from Prior Reporting Period
-32,586
11,016
-1,289
8,458
-29,970
-25,417
-20,243
Traders
213
76
73
51
57
296
177
Small Speculators
Long
Short
Open Interest
72,938
27,305
510,223
6,237
1,063
-19,180
non reportable positions
Change from the previous reporting period
 

Again, keep in mind that these numbers are basis the Comex close on Tuesday of last week. For the reporting week, gold closed up $22 on Wednesday the 3rd, down $7 on 8/4 and down $7 again on 8/5. Last week, it was up $62 on Monday and $31 on Tuesday for a net change over the five days of +$91.

If you read any analyst opinion or watched any CNBC late last week, you were "informed" that the "gold bubble was popping" after "speculators" had succeeded in driving the price to $1800. Hmmm. Now, is that really what happened or is that simply the SPIN put out by the Cartel's Agents of Disinformation? A simple review of the chart above gives you your answer.

Note that, over the reporting week, when gold was rising over $90 and creating the "bubble", the "large speculator" category saw their total holdings decline by almost 10%! Speculators were selling, not buying. Well, who was buying then? The Cartel! The Forces of Darkness covered nearly 30,000 of their short contracts. Bubble, my ass! The Cartel was looking to cover as quickly as possible and they lost a lot of money in the process. A temporary bubble would form in the exact opposite conditions where speculators are rushing into gold and The Cartel is eagerly supplying their unbacked paper.

Note, too, that while gold was rising $91, total open interest was contracting by about 3.5%. This is a very bullish development, too.

So what can we conclude from this info?

1) The loss of the U.S.A.'s AAA rating must have scared the living daylights out of The Cartel. With a total disregard for P&L, they attempted to orderly cover as many contracts as they could.

2) Large speculators (managed money) took a lot of money off the table. This money will, eventually, be placed long again. Of that, you can be certain.

3) Take a moment to recall the names and faces of those who were telling you about a "popping bubble" in gold late last week. No responsible reporter or analyst would have made that claim without first reviewing these numbers. You can therefore deduce that:

a) the "bubble-callers" are either completely clueless about how the gold market works and should henceforth be ignored.

b) the "bubble-callers" know exactly what they are doing. They are purchased Agents of Disinformation for The Cartel. Do not, under any circumstances, take these people seriously. Their job is to sow seeds of doubt in your mind and get you to sell your PM insurance.

CONCLUSION:

Despite reports to the contrary, gold is not, and never was, in a bubble. In fact, the large movement out of gold by the large speculators creates a very bullish atmosphere for gold as that money will, most assuredly, be coming back into the market soon. Also, those "in the know"...The Cartel...are so frightened by the potential for even greater future losses, they are moving to cover as many shorts as possible in order to minimize future damage. The "dumb money"...the HFT and managed money specs...are on the sidelines while the "smart money" is covering against future moves. This is quite a bullish scenario and one that definitely portends higher prices in the near future.

Next, let's take a look at the silver CoT.

Silver COT Report - Futures
Large Speculators
Commercial
Total
Long
Short
Spreading
Long
Short
Long
Short
32,101
13,713
18,761
36,394
71,735
87,256
104,209
-6,164
299
-2,044
5,953
-3,294
-2,255
-5,039
Traders
74
40
52
35
43
139
111
Small Speculators
Long
Short
Open Interest
28,683
11,730
115,939
-2,191
593
-4,446

Note that the structure is the same with large specs liquidating almost 20% of their longs while The EE covered slightly more than 3,000 shorts. Do you recall the price action during these five days? Let's just say it was a little different than gold. Silver rose $1.67 on 8/3 and then it fell $2.33 on 8/4 and fell another $1.22 on 8/5. After being up well over $2 on 8/8, it settled up just $1.17 and the gave back another $1.50 on 8/9. This gave us a net change for the reporting period of down $2.21. 

Looking at the CoT, the price action and the low level of total open interest, we can presume the following:

1) The decline in silver was led by speculators fleeing the market.

2) The Forces of Darkness saw this price weakness as an opportune time to cover some of their shorts.

CONCLUSION:

​The bullish case of silver is at least as strong, if not stronger, than gold. Total open interest is now as low as it was in late June and is down over 20% from the highs of late April. While the extraordinarily high margin rates for silver will make it difficult to reach the late-April levels again, total OI of just 115,000 is still very low. Over 60% of the total open interest is represented by EE short positions while large specs only make up 20%. For reference, in late April, the EE short position dropped to about 50% of the total while the spec longs rose to about 30%. As we now know, 1.5:1 is not a very good ratio for future upside. The 3:1 current ratio is very bullish and leads me to believe that silver is primed for a significant UP move in the weeks and months ahead.

It's going to be another crazy week in the PMs. Expect a continuance of the volatility we saw last week. Though I still love gold, I plan to lighten my gold positions just a little this week and swing some funds back into silver. I'm more encouraged than ever about the near-term future for PM price. The fundos have only gotten stronger in the past few weeks. Amazingly, at the same time, the market internals have improved, too. This combination sets us up for some powerful moves in the weeks ahead. Get ready. TF

About the Author

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  321 Comments

¤
Aug 15, 2011 - 9:14am

Silver getting attacked/How timely

Getting beat up again just before the market opens.

Getting real tired of these MF'ers stealing money from us like clockwork, literally.

surfeitndearth
Aug 15, 2011 - 9:21am

Bart Chilton on TRNN

CFTC Commissioner: "A Hair Trigger Away from Economic Calamity" 

here: https://therealnews.com/t2/index.php?option=com_content&task=view&id=31&...

redwood
Aug 15, 2011 - 9:21am
Hickerydooo
Aug 15, 2011 - 9:24am

EOBOT is a troll

You only talk about correction(s)...go away...leave this station.

speconomist
Aug 15, 2011 - 9:24am

@Colonel-Angus Thanks, is the

@Colonel-Angus

Thanks, is the only one I already had, hehe, the rest seem to be blocked in their official websites, if anyone remembers that website, providing links to several TVs like CNBC, etc. please share it.

Hickerydooo
Aug 15, 2011 - 9:24am

EOBOT is a troll

You only talk about correction(s)...go away...leave this station.

Tom L
Aug 15, 2011 - 9:24am

Pre-Opening Comments

Silver looks good on the 30 min chart this morning. Clearing the $39.40-.50 area would be excellent. Really congested chart in this range though. 

https://www.flickr.com/photos/29681681@N06/6045229671/

Gold is coiling and will do something soon, with the $USD flirting with 74, I'm betting up.

https://www.flickr.com/photos/29681681@N06/6045786324/

Ta,

ewc58
Aug 15, 2011 - 9:27am
JamboMamboBill
Aug 15, 2011 - 9:28am

I have dollar going down to

I have dollar going down to 73 possibly later on, 74.19 now, oil up to 86.50 maybe strong moves will come. I think this is a bullish set up for PMs... Let's watch and see.

Tecumseh
Aug 15, 2011 - 9:29am

Wherefore art thou, Turd?

Wherefore art thou, Turd?

Shill
Aug 15, 2011 - 9:30am
Violent Rhetoric
Aug 15, 2011 - 9:31am

40th anniversary

To celebrate the 40th anniversary of the US going off the gold standard I just ordered an American Gold Eagle.

Shill
Aug 15, 2011 - 9:33am
ginger
Aug 15, 2011 - 9:35am

"Was just down in the bunker

"Was just down in the bunker making sure all my hams were on the shelf in order of expiration date. And all facing the same way, but that goes without saying! Admit it Ginger, you know what I'm talkin' 'bout!"

EricO, ...yes.. ..sadly .........you are correct. lol. indecision I know your kind all too well as I have to make sure ALL LABELS FACE OUTWARD too. wink

Ok.. ...markets are open now so I shall refrain from porky pig talk today. .....GGCRF lookin' good out of the gate! :] GO JUNIORS!

Shill
Aug 15, 2011 - 9:39am

Miners again getting smoked.

Another long day I see. Time to walk away for awhile and check back later.

¤
Aug 15, 2011 - 9:45am

SLW this a.m.

Just saw pretty much the same thing in my options happen except for a shorter duration( 1 minute).

No groaning here today. I'm ok with it even though I didn't catch a rosy bid this time so I lowered my gtc limit a bit more but not out of the green. So far the SLW call option surge in the a.m. has happened 3 out of the last 5 trading a.m.'s

I'm still ready and it will happen again. I was just a little bit too high in my limit price and the duration of this opening surge was short lived. Last weeks was about 3-4 minutes long and I think I would have caught a rosy bid if I had a limit order in from the first second of trading.

Tomorrow brings another day. This will happen for me and all of you hopefully if you follow and hold SLW.

I also put those GTC limits on USO calls for a STFS just in case.

Volatility is our friend and it's here for awhile.

cpnscarlet
Aug 15, 2011 - 9:46am

The Big Insults

Another morning of just saying WTF? That worse thing about investing in these times is that almost every market is an insult to logic and sound finances. This AM, the Euro is cranking up>>WHY? The miners tanking? That shouldn't happen! Any who is stupid enough to give the US Treasury their FRNs for 10 yrs at a return of 2.25% when 5% was once paid when times were good and the US was solvent.

Morality - GONE. Fiduciary Responsibility - GONE. Sound Money - GONE. Honest Contracts - GONE. And the last insult...Logic - VANISHED.

ewc58
Aug 15, 2011 - 9:51am

Swissy and dollar down =

eurozone has dodged the bullet so far this week. Back and forth the chaos goes. What blows next just a few know. And they ain't telling the likes of us. So what? We've got the Real Thing.

Dr G speconomist
Aug 15, 2011 - 9:55am

@speconomist

"Hi there, some days ago I saw a link posted in the comments of one of Turd's posts which offered the possibility of watching free some US TV channels providing financial information."

I always use www.live-news-stream.com

That has Fox news, CNBC, MSNBC, Al Jazeera, CNN international, CNN, HLN, etc.

Tom L
Aug 15, 2011 - 9:55am

There goes Silver

Right on schedule. Next stop $39.60

Ta,

Shill
Aug 15, 2011 - 9:59am
margaritatime
Aug 15, 2011 - 10:00am

@Tom

Ha, was thinking the same thing - except 39.72 smiley

Dr G
Aug 15, 2011 - 10:03am

@margaritatime

Followed by a large raid/smackdown.

Unfortunately, I don't think this small move by silver will hold. Not enough money flowing into the asset, which means all it takes is one large seller to do so for profit and POOF!--down to $38.50 again we go.

Tom L margaritatime
Aug 15, 2011 - 10:05am

@Margaritatime

Yeah, I didn't look closely enough at my own chart. I agree, $39.70-.80 in the next hour.

Ta,

Tom L Dr G
Aug 15, 2011 - 10:07am

@DrG

Maybe, but let's see if the $39.40 region provides support, when/if that happens. I don't expect to clear $40 today. Just pushing through some of the x-currents and negating them as resistence would make me happy.

Ta,

margaritatime
Aug 15, 2011 - 10:08am

Hmm

Dr G - I expect it in gold, but was confident silver would push up a little and hold - like stealing bases. If a sell off occurred I figured it would only knock it ten cents. I just don't see many sell offs happening 10 days before expiry.

baldric
Aug 15, 2011 - 10:08am

big banks to end short selling Au & Ag ?

Just been mailed that CNBC has just announced large banks to cease short selling silver & gold is this correct ?

Dr G
Aug 15, 2011 - 10:09am

@Tom

I like your style smiley. I would love support at $39.40.

ewc58
Aug 15, 2011 - 10:14am
Debbie Downer survivalwstyle
Aug 15, 2011 - 10:18am

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