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

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  321 Comments

ginger
Aug 14, 2011 - 4:41pm

Just took a look at that

Just took a look at that Bacon Explosion recipe.

OH.MY.

I am going to make that this week. It's beyond my control. I have to. ....I will report back. ...Whoever posted that.. I'm sorry.. I c&p'd the web address but don't remember who originally linked it ..but I thank you.. ........my arteries however.. ..they aren't sure if they should thank you now or after they clog. :D

Eric Original
Aug 14, 2011 - 4:44pm

topped off my stash

I had to go to town for groceries anyway, so I swung into my local WAG and grabbed three hams too. That puts current inventory at 13.

The beauty of these little babies is that they are shelf stable. All the other canned hams in my local stores require refrigeration. What's the point of that? Kind of takes it out of the SHTF scenario don't it?

Tom L had an excellent point earlier this morning about the benefits of canned salmon. Those Omega 3's are crucial and ham and bacon will be pretty piss poor in that regard. But tasty! Life is about choices.....

Shill
Aug 14, 2011 - 4:45pm

Pegasus

Nice I actually own one of those of well, great and accurate. Alas has been a safe queen for some time now only put about 200 rounds down the pipe and there she sat.

This is what I carry daily, this beretta .25 slips right in my pocket and disappears nicely. Don't let this little beretta fool you more than enough stopping power for the bad guys.

If I were carrying High cap it would be my Sig 232 or 239.

ewc58
Aug 14, 2011 - 4:50pm
winemakerRuNuts
Aug 14, 2011 - 4:50pm

The Beast of all Processed Meats

I don't know jack squat about this CoT stuff, but I do know a deal when I see it, and I now am the proud owner of 12 canned hams from Walgreens. Hat tips all around!

The canned ham--"the beast of all processed meats" (quote from Curious George "Bag Monkey" episode--yes I have young kids) . The perfect addition to my food preps.

Eric Original
Aug 14, 2011 - 4:50pm

I want reviews!!!

I'm going to want to see reviews from everybody on those hams. I like them, but I'll be the first to admit that they are not for everybody. It's not your fancy Easter Ham or anything, but as a cheap and easy 2 buck item in the pantry it fills the bill. And in a true SHTF scenario you will be damn glad to have it.

Enjoy all!!

Uh oh, Daughter O is trying kick me off the computer again. She has to check her face-space or some damn thing.....

Shill
Aug 14, 2011 - 4:51pm
exiledbear
Aug 14, 2011 - 4:52pm

When TSHTF and guns

A gun will be good. A gun with the biggest magazine you can get. It won't matter so much that it's a Glock or a Ruger or a Colt as it will that you have one, people can see you have one and that will deter them from attacking you. If you know how to use it.

Guns are the personal civilian equivalent of nukes, they're mainly for deterrence against those who already have them.

If you're gonna shop for a gun, please do your own research. There are shooting ranges that will let you rent and do some target practice. Rent a wide variety of different guns, get to know how they feel and behave. Try the different calibers too. There's no one gun for everyone, there's only the gun that's right for you. Once you've tried a lot of guns, then place an order for one. Don't let people talk you into something that they think is right.

ewc58
Aug 14, 2011 - 4:55pm

Let's get ready to RUUUUUUMMMMMBBBBLLLLE!

It's almost Clobberin' Time troops!

Strongsidejedi
Aug 14, 2011 - 4:56pm

God Only Knows

For those TFMetalsReport junkies who appear so ham-strung this weekend:

The Beach Boys - God Only Knows (From "Good Timin: Live At Knebworth" DVD)

Don't let the predictions get to you.

God only knows what I'd be without you.

If you should ever leave me...

And for those of the tweeners:

Michael Jackson - They Don't Really Care About Us (Banned Prison Version HQ)

And, when you Gen-Xers and Tweeners get done with the Ipad and the Tablet

https://www.youtube.com/watch?v=qXBswFfh6AY

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