If the CoT is true and accurate...and I have always thought it to be...then there can be no doubt that we are on the verge of major fiat-conversion price rallies in both metals, perhaps even something more dramatic.
(By "on the verge", I DO NOT mean "starting Monday". That is not what CoT analysis is all about. CoT analysis simply tells us how the sides are aligning and preparing for the next major move.)
I simply cannot stress enough how unusual and extraordinary this data is, particularly in silver. I gasped when I saw it. It is breathtaking...and you know I try very hard to avoid hyperbole. Let's get to it.
For the reporting week of 4/17 thru 4/23, gold was up about $21. Total open interest increased by 2,000 contracts. Sounds nice and simple...perhaps even mundane and boring. WRONG!
This week, AFTER gold had already fallen over $200, we saw these changes:
- The Large Specs sold 7,500 longs and initiated 17,100 new shorts for a net long reduction of 24,600 contracts. They are now net long at a ratio of just 2.12:1.
- The Small Specs sold 5,900 of heir longs and began 7,000 new shorts. This net long reduction of 12,900 contracts leaves them flat. Long 39,868 and short 39,735.
- The Gold Cartel utilized all of this Spec selling to buy 11,600 new longs and cover an amazing 25,900 existing shorts. This is a net short reduction of 37,500 contracts and leaves their net short ratio at a must-be-seen-to-be-believed 1.67:1.
Clearly, The Gold Cartel Bullion Banks have used the occasion of the $240 selloff in paper price to aggressively cover shorts and add longs. Which side do you think will profit from these changes? The Specs now nearly crowded into the short side (the SmallSpecs are net neutral, for Pete's sake!) OR The Cartel?
Oh my goodness gracious, I really don't know what to say about the CoT picture in silver. There is now NO DOUBT that the oft-mentioned "Civil War" in silver, where the entire commercial category rises up and takes on JPM, is ON! It's happening right now, in real time.
I was amazed last week that the silver commercials, who had openly challenged JPM by building a gross long position in excess of 60,000 contracts, had not been forced out of the long side by the $5 drop and the attendant margin hikes. You'll recall that last week, the Comm longs added contracts, instead. Not a lot but who cares? Just the simple fact that they didn't capitulate was HUGE. And now get a load of the action from this week:
- The Large Specs sold 884 longs and added 1,713 new shorts for a net long reduction of 2,597 and a new net long ratio of just 1.63:1.
- The Small Specs did the same. They dumped 1,895 longs and added 842 new shorts. Just like the gold Small Specs, the silver Small Specs are nearly neutral at long 20,782 and short 18,619.
- Now, hold onto your hat. The Commercials in silver...this is the everybody but JPM crowd...added 6,617 new longs this week. Yes, that's right. After the brutal and malicious beatdown, not only didn't the CommLongs sell, they increased their gross position by over 10%! They are now long a could-it-be-a-misprint 68,258 contracts. This is unbelievable and, literally, twice the size of their historical average position. Because the other commercials were such heavy buyers, JPM and their two pals actually had to add shorts this week. ADD! At $23! The shorts now total 85,422 and the all-important Silver Cartel net short ratio has fallen all the way to a preposterously bullish 1.25:1.
Look. I don't want to be over-dramatic here. However, I simply can't overstate how remarkable this is. There are some VERY COMMITTED, VERY DEEP POCKETS who are directly challenging the long-standing status quo in the silver pit. The questions are:
- Why now?
- What do they know? AND
- What are they expecting next?
Chew on that over the weekend and come back Monday with your game face on. Things are about to get very, very interesting.