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

Thu, Feb 14, 2013 - 4:11pm

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:


    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:


    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:


    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 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.


    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.



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

    About the Author

    turd [at] tfmetalsreport [dot] com ()


    Feb 14, 2013 - 4:14pm



    El Gordo
    Feb 14, 2013 - 4:17pm

    I don't know what the numbers mean,

    but if I did I think I would be scared to death. Ignorance is bliss.

    Feb 14, 2013 - 4:18pm

    My opinion on the OI

    Resolute longs won't sell. 

    Cartel shorts are the majority of the newly added OI.

    Downdrafts are not having the same effect as they once did.

    JPM is getting cornered.

    Time is running out.

    Channel is narrowing.

    Rat is shitting in the corner, prepared to go nuclear.

    Corner is caving in.

    Roof coming down.

    Rat trying to flee.


    Tail caught in trap.

    Rat dies.


    Feb 14, 2013 - 4:19pm

    Top 5?


    Feb 14, 2013 - 4:20pm

    Mr. Fix.  From the previous

    Mr. Fix. From the previous thread. The money printing can go on forever as long as the nations that produce food and natural resources keep doing it (keep printing).

    To reframe the question: Who will be first to stop printing, and when? That's the answer to how long it can go on.

    If you can't name a nation that will stop then there can be no end.

    Feb 14, 2013 - 4:36pm

    I posted this a few weeks ago.

    This is obviously not silver, but I think it bears to keep this in mind when questioning why hasn't price performed since the Fed announced QE to Awesometown. It took roughly 6 months for gold to break out to new highs after QE 2 was announced. Then one day with very little fanfare, we broke out of that range and went $100 higher in a month. Gold went down roughly 8% from 1430 to 1305, very similar to what we have post QE to Awesometown. 6 months from Sep 14 is middle of March. 

    I do find it most curious that the Cartel would add 14,000 longs and 19,000 shorts. Perhaps someone is defecting? 

    Yeah about on topic.....I have been shedding tears at the mention of horse meat. The horse lords have called a meeting of the general council, I have been invited to act as the scribe......EXPECT US!!!!!!!!!!

    Feb 14, 2013 - 4:38pm


    That took alot of effort to put together. I'm an observer when it comes to these COT numbers and breaking it down. It's a little unnerving to think any or all of these numbers might somehow be misleading or just the icing on the cartel cake that runs much deeper and murkier then we might imagine.

    Trading anything big in these markets is like getting into a shark tank. You'll probably get nipped or devoured unless your in and out real quick.

    Feb 14, 2013 - 4:41pm

    Maybe Larry Edelson is right?

    Edelson has been forecasting a silver crash to the low 20's for many months now. And once that happens he is ready to back up the truck to ride the long term bull. Maybe it will pan out.

    Feb 14, 2013 - 4:43pm

    OI conundrum

    I’ve been perplexed by recent total OI, and in fact posted my own q here about it a week or so ago. Total Silver OI has been above 150,000 since the big (+0.99) up day on 1/30/13. That’s two weeks now. At the end of day Wednesday (2/13/2013) it was 153,296.

    The last record I have of it being anywhere near that high was 11/26/12 when it was 153,398. That was the day after the Dec12 options expired, and presumably was the result of in-the-money options converting to futures contracts, and that spike didn’t last.

    Two things the recent high levels might be, but don’t seem related to: the 1/28/13 options expiration, and CME’s lowering of margins on silver contracts.

    One impression I have from the charts — I’m currently trying to test it formally — is the most of the wild drops are during Comex hours. Asia, London, and even the access market seem generally (if modestly) up. Go figure. I’m trying to.

    Yooper Rick
    Feb 14, 2013 - 4:45pm

    Re: Happy

    IMHO I don't believe who does or doesn't print will determine the end. When the overprinted currencies are no longer accepted as payment for delivery of hard assets THAT will be game over. No imported oil, no South American produce in winter, no cheap plastic Chinese junk at Wal-Mart. Game over!

    Feb 14, 2013 - 4:46pm



    6 months in mid-march has a lot of symbolism to it for many reasons, regularly discussed here. Even JS says March for breakout. And this might be the event that brings us to the $50 mark again. But, then in December we marked QE to infinity...which if the 6 month gig holds true, June would be sending Ag north of $50, into unprecedented territory and perhaps giving us the move toward $100 we ALL have been waiting for as we head into the end of the year.

    I really don't think this is out of the question. In fact, not only do I find this possible, but bordering on probable. Throw in the Pope/Vatican scandal and the link to G/S, which I WILL NOT go into here, and we've got ourselves a humdinger of an upcoming move. Its coming peeps, and y'all know it.


    Feb 14, 2013 - 4:47pm


    Turd... excellent wrap up. All I can say is that the figures and stats out there now are completely worthless in what we are facing going forward.. 

    First.... 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? Remember back in 2011 when silver hit $50 and a few months after, the Comex inventories plunged to 99 million oz Today we are at 158 million oz. Are these figures for real... or are they BS?

    Second... the COT Structure does not make an sense whatsoever. On face value and if you are objective, it looks as if we are going to see a short term decline in the silver price. Michael Belkin on KWN did a great interview showing economic cycles that are on average 45 months of expansion with 12-15 months of recession. This recent expansionary cycle is at 44 months.

    Belkin believes we are going to see 30% decline in S & P earnings along with a 30% decline in the S & P itself. This will probably be the same with the Dow Jones. 

    Third... I am not much for the short term moves in the economy... I look at the overall long term picture. However, that be said, it does look like the stupid ALGO's and PAPER TRADING will continue to run the market for the time being.

    Will we get a move up in GOLD & SILVER when the markets finally tank in the next 2-6 months when the slowdown is realized, or do we see a broad sell off in all asset classes until Bernanke brings out the REAL HUGE PRINTING MACHINE?

    All I can say is this.... Energy = Money. Gold and silver are stores of trade-able energy. You can't go wrong with these types of stores of value. 

    We may have to go TRAVEL down some VALLEYS and up some MOUNTAINS to finally arrive at the TRUE VALUE of gold and silver.

    Admiral Ag Bar
    Feb 14, 2013 - 4:50pm

    Thanks for the data Turd

    I have no clue. I have a heard enough time following along with the COT data even when you are reading the tea leaves correctly. surprise

    Feb 14, 2013 - 4:50pm

    Perhaps the simple explanation is the best?

    I know we can only work with what we know, so this answer will be unsatisfying, but... If there is a disjunct between OI and price movement, might the most direct explanation not be that they are fudging reporting their true positions? Put another way, if I could get away with what the cartel does every day, if I owned the regulators, if I operated and rehypothecated with impunity... well, I sure wouldn't accurately report what my true market position was, and I don't think I would be concerned by what the lapdogs at the SEC, the CFTC, or even the CME might do to me if I fudged the numbers to hide my real positions.

    I know, it's an unprovable hypothesis, and thus unsatisfying. But it might explain some things.

    Feb 14, 2013 - 4:53pm

    Sentiment v fundamentals

    It may be that the market is only driven by sentiment, because the big money needed to drive it is speculative. In which case the metals are on the wrong end of it. I think that around Xmas time, the cartels managed to break the correlations that should have existed between QE and price and drove the spec money into equities.

    To do that, they used the SLV as one almighty price shock absorber. Hence the gigantic physical purchase they made.

    "...the simplest way to understand the impact that ETFs have on the market is to think of them as giant shock-absorbers and flow deflectors. The funds themselves are in effect nothing more than giant depositories, where inventory (or flow) can be temporarily parked in the “encumbered” off market arena until its potential price impact becomes desirable on the public markets. The intermediaries who manage these flows make money from arbing the small spread opportunities that become available from subtle changes in the curve structure, their own cost of funding and the flow they have available to them, largely by diverting flows in and out of the ETFs versus the public market when it pays them to do so."

    Feb 14, 2013 - 4:54pm


    If the Chinese were responsible for suppressing the price of silver it would make more sense. They may be the deep pocket large spec longs that have been consistently been taking delivery at the comex . That is what comes to mind when I read Harvey Organ and Jim Willie.

    It may be a war between the East and JPM

    1) We have been seeing waterfall declines at key times at 8:00 pm

    2) JPM may have closed out their shorts with that 18 million oz deposit into the SLV

    3) The delay in opening NASE

    4) Payback for the demonetization of silver.

    Feb 14, 2013 - 4:54pm


    I too find myself watching the only thing I can watch hoping to see a real market develop. Alas, it's not gonna happen, not until the whole paper market fails. Then and only then will we have real price discovery. What does it means when the paper price goes up? What does it mean when the paper price goes down?

    All the down price means is that more physical is going into hiding.

    Feb 14, 2013 - 4:55pm

    CoT doesn't make sense

    CoT doesn't make sense because the market doesn't make sense. We are in a market run by the Mad Hatter and the Joker's mentally deficient love child.

    Don't be too surprised to find that the Fed and their proxies are now every bit of the silver market, in every category. Do we really KNOW that people are still going long and short silver paper? I don't.

    Even if that isn't the case, it seems likely to me that the longs are simpletons who haven't learned a damn thing from MFG and Co, and the shorts are all Fed proxies, and as a result, there is no real market. With the price of silver being set by these idiots, there will be a shortage. With the shortage comes the delivery demands. Then the industrial panic when they find there is none there.

    It gets closer every day, but we have to deal with insanity, inanity, and surreality until then.

    Feb 14, 2013 - 5:34pm

    I have a very bad feeling here

    They have no Gold, and we won't have any if they take it to the point where we capitulate. Or just confiscate. Same goes for Silver. Even more so. How many ounces of Silver get vaporized when a Bunker Buster gets dropped? Where is the Silver going to come from? To rearm? Sure ain't coming out of the ground fast enough to replenish the supply problem. They will take it from stackers...and trust me....they know who we are. Pray to God that this is not the final resolution.

    Feb 14, 2013 - 5:35pm

    Fraudulent market=COMEX in concert with SLV. . .

    The markets are manipulated. Ted Butler said years ago, as did Fekete, I believe, that China is behind the big silver short. They sat on huge piles of silver (they went off silver standard in 1935), so shorting against their long physical was a way to make money on a "dead" asset.

    Now, silver is in much shorter supply. Does China still short, but naked? So that it can swoop in to gather as much physical wherever it can?

    In any case, it is the CONCENTRATION of the shorts that is manipulative. If it is China, the Fed, or simply JPM's own account, it is concentrated and therefore manipulative. Someone is cornering the market.

    Feb 14, 2013 - 5:40pm

    Turd, my thoughts have been the same for about a year now

    The cartel controls their own price mechanism. They will never let the price go away again unless supply runs out. Even then, we could have 29 dollar paper silver with 100 dollar an ounce physical. You know as well as everyone on this board that the price is 100 percent controlled. With that said, they probably fix their numbers to make people like you and Harvey Organ confused. I mean, wouldnt you do that if you were them? That would be fun in my opinion and would make for a good laugh at your 1000 dollar dinner in New York or London that night. Thats why I like the Phyzz! Try buying some of that at 30.50 an ounce. Good luck!

    Feb 14, 2013 - 5:41pm

    It's winding up tight. We are

    It's winding up tight.

    We are close to the monthly chart support.

    Big money comes to play now.

    The bet is:

    trash the support, rally off of monthly lows, and scare the longs so many of them give it up for nothing


    crash the silver market and everyone who bought in the last 18 months has to sell to escape

    Game on!

    Feb 14, 2013 - 5:41pm

    Think out of the box

    Backs are against the wall, what do they do? Anything

    Turdle GG
    Feb 14, 2013 - 5:48pm

    Connection with massive decrease in SLV short position?


    Perhaps there's a connection between the increased cartel positions on Comex and the recent massive decrease in the SLV short position.

    See Ted Butler's most recent piece talking about SLV. He doesn't know the answer, but maybe you can join the dots somehow, with some input from your London connections?

    Some excerpts from Ted's latest:

    "The much anticipated release (by me at least) of the latest short interest statistics for the big silver ETF, SLV, came out late Monday evening. The reason the report was anticipated was because it covered the period of time in which there was an unusual one-day deposit of over 18 million oz into the trust, followed by metal withdrawals of nearly half that amount. ... As indicated in the new data for positions as of Jan 31, short interest in SLV fell an unprecedented (I believe) 10.5 million shares to under 7.3 million shares (oz) 

    ... the total short position in SLV is now lower than at any point prior to 2011 and as a percentage of total shares outstanding (2.1%) may never have been lower.


    The odds-on conclusion is that the 10.5 million oz (share) reduction in the SLV short position was initiated by a single entity. Clearly, JPMorgan is the most likely candidate."

    I now see that "Sneakdoggiedog" posted a related comment in the previous thread, which is worth re-posting:

    "I am constantly coming back in my mind that that motherload of silver deposited into SLV safes last month. The concept of the Cartel shorting SLV (or futures) until you get a lower price point you want and then going out and buying physical through another means at that lower price to close out a profitable short is genius. If they had tried to cover the huge short within SLV, they would have affected the paper market and caused a squeeze. If the Cartel really covered with physical. as has been suggested, then why can't they rinse and repeat? And what does that say about OI and the price point?"

    Shorting SLV and then being able to cover your short at a lower price point via the deposit of metal is certainly a loophole that cries out for being exploited.

    I keep thinking that the JPM short position on Comex can eliminated via one phone call from Jamie to the PPT. Or JPM order that the market go to full 100% margin, with JPM covering into the panic and going net long.

    Feb 14, 2013 - 5:56pm

    Another possibility . . .

    Is it possible that the same entities (JPM/Fed, or JPM/China, or JPM/HSBC) are long and short, not only as cartel members, but also playing the other side? 

    Do they own/use other entities to buy what we know as the Large Specs?

    In other words, due to the fallout from MFingG, etc., maybe to keep up pretenses, they are both sides of the entire paper game?

    If so, they can obviously paint the tape any way they want. JPM is custodian for SLV, the largest cache of physical silver that is known to exist. JPM is above the law; untouchable. The CFTC bows to their magnificence.

    fast mover
    Feb 14, 2013 - 5:59pm

    Premiums on Phyzz still

    Even if they get AG under $30, we're still going to pay a hefty premium if the phyzz market is still tight. I don't think a smash to $27 is going to give us stackers that great of a gift.

    Feb 14, 2013 - 6:02pm

    Kind of funny, kind

    Kind of funny, kind of....from an email

    Big Gov and their "partners" have a real conundrum on their hands, they can't figure out whether they should kill us, or make us produce. You have to feel sorry for them, the sheeple are a real problem.

    ned braden fast mover
    Feb 14, 2013 - 6:02pm

    tmosley comment may be prescient

    Hope I spelled that right. With all the FUD and MOPE in play.....HOW DO WE KNOW the COT structure? Who provides the COT numbers? I truly just don't know any of this can be trusted, FWIW.......

    Feb 14, 2013 - 6:26pm


    Quiet simple I guess... Deflationary scenario. Read Elliott Wave State Of The Global Markets: "

    Feb 14, 2013 - 6:33pm

    Fudge and Such

    I have tried on several occasions to dig into the COT numbers and understand them. I can not. They don't make sense to me at all - despite all of the excellent analysis and explanation that Turd does with the COT data - frankly, I'm lost. Patterns and logic seem to be non-existent in these data sets.

    I'm afraid that I fall into the camp that says the numbers are mostly fabricated and fudged to obfuscate and confuse the market and it's participants intentionally. I suspect the cartel can see all of the numbers, all of the positions - everything - to them it is transparent - to us - it's a brick wall. Honestly I've lost all confidence in the markets, the data and the game. (Everything, that is, except metals in hand).

    Job numbers, inflation numbers, etc, etc - all fudged. Why would there not be fudge in the COT numbers?

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