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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turd [at] tfmetalsreport [dot] com ()

  321 Comments

Dr G
Aug 15, 2011 - 10:19am

Yeah, POSX is dropping like a

Yeah, POSX is dropping like a rock, but I'm still not convinced with this silver move. Something fishy about it. And gold is struggling. That sends off warning bells to me. If you are trading, I wouldn't trade this silver move.

Tom L Dr G
Aug 15, 2011 - 10:19am

@DrG

Having you guys to talk with has really helped me get more disciplined in my analysis. Nothing like putting your opinion out in public at look like a lazy id10t. So, as a consequence, I've drawn more charts in the past 3 weeks than in the past 3 years... and my brokerage acct. is the better for it.

With the $USD bashing through 74, it's only a matter of time before gold lifts out of its coil at $1740 and that should take Silver along for a couple of dimes.

Ta,

speconomist
Aug 15, 2011 - 10:20am

@Dr GThat is the one, huge

@Dr G

That is the one, huge thanks!

@baldric, great joke! Not April 1st yet.

Debbie Downer
Aug 15, 2011 - 10:21am

Turds interview last week

01/13 Clif High ~ TMRN -2011-08-12 Time Monk Radio Interviews Present:
averagejoe
Aug 15, 2011 - 10:22am

Great Idea

Great article at zerohedge. IMO a great Idea. Cali lawyer you out there?

Quote from article. Link below

Note: I’ve separately contacted Tyler Durden to elicit his support. My proposal is that he opens this up as a “class action” whistle blow. (All ZH registered viewers as of 5PM today will be included in the payout). So far Mr. D has been keeping his cards to his chest on this. (I can’t blame him, there are billions involved.)

https://www.zerohedge.com/contributed/how-make-some-big-bucks

FogHorn LegHorn redwood
Aug 15, 2011 - 10:28am

value investing in pm stocks how to buy

@redwood, when I started buying miners it was easy as the algos had not been used on the miners yet then, SLW started acting odd, maybe in hindsight it was being targeted. Algos have come along way and are suppressing/influencing all markets imho. Turds have to identify and use every technique out there to protect Our capital. Value investing is nothing new but just another arrow in the quill. Buying stocks is easy, but getting the best price and the least downside exposure, buying in tranches etc. just makes good sense. Thanks, for others turds, I'll repost the link https://www.theaureport.com/pub/na/10565

margaritatime
Aug 15, 2011 - 10:30am

@Average Joe

So let me get this straight...

According to the article "You just have to uncover a scam. Not some small scam, mind you. It has to be pretty big. The minimum threshold is a scam of not less than $1mm. These days everyone is ripping off everyone else. So this is really not as hard as it may sound."

So basically I need to pull all my charts together from the past few years, and present a powerpoint presentation that an eighth grader can understand and present the facts of the case:

The only problem is, the ones offering the reward are harboring the guilty parties.. Although it would be cute to get [another] coalition together and illustrate the puppet strings JPM et al are playing.

I guess they mean the 'other' bad guys...

ewc58
Aug 15, 2011 - 10:31am

continued softness in PMs means lower

prices on some nice calls today.

GG 1.21.12 62.50 call. Down .39/24% to $1.17 bid, 1.21 ask, starting to look pretty attractive down here. It's the 2nd Biggest Loser on the Miner Call watchlist today, exceeded only by AEM 1.21.12 $80. That's down 28%: 1.40 bid, 1.56 ask.

Good hunting.

RuNuts Debbie Downer
Aug 15, 2011 - 10:32am

Re: Turds interview last week

"That'll make my mother feel better." LOL!

Dr Durden
Aug 15, 2011 - 10:32am

Feel's so odd not to be

Feel's so odd not to be raided by Blythe right now. Maybe she's tired and hung over from the weekend and hasn't peeled herself out of bed yet that voracious whore.

The lower trendline off $37.05 from the dip last week is looking hearty as hell.

ewc58
Aug 15, 2011 - 10:33am

Nice work DD

way to get that link up. Thank you.

RuNuts
Aug 15, 2011 - 10:33am
margaritatime
Aug 15, 2011 - 10:34am

New thread

New thread

Shill
Aug 15, 2011 - 10:35am
Silver bear of very little brain Violent Rhetoric
Aug 15, 2011 - 10:35am

40th Anniversary

To celebrate the same anniversary I bought 40 British sovereigns

GOD SAVE THE QUEEN!

Eric Original
Aug 15, 2011 - 10:44am

Debbie Downer

Seriously? That's all we talked about all day yesterday.

Any Walgreens store this week.

Also online, though I see now the website says "Out of Stock"!! Turd Nation cleaned them out!!

https://www.walgreens.com/store/c/celebrity-boneless-cook-ham-with-natur...

silver foil hat
Aug 15, 2011 - 10:59am

re: CNBC email.... just a thought...

you think this might have anything to do with it, if true?

Message to Jes Staley 7-Aug-11 09:46 pm

Libenter homines id quod volunt credunt - (Caesar)

The Leader expects your answer promptly or it will be thermonuclear within a fortnight. Ask Ken Lewis if he has this understanding!!!

You're going home in a body bag do da, do da.......
Eric Original
Aug 15, 2011 - 11:02am

silver bear...

40 Sovereigns? Super nice!!

ozoro Debbie Downer
Aug 15, 2011 - 12:39pm
Puzzler TheYeomanFarmer
Aug 15, 2011 - 3:08pm

Fresh salmon

TheYeomanFarmer:

Not quite Alaska, but we're just down the road, or in this case the Inside Passage. We're in Bellingham WA, which is about 90 miles north of Seattle and about 15 miles from the Canadian border. The Sockeye we ate was swimming around in the nearby San Juan Islands just hours before landing on our plates. Usually fresh wild caught Sockeye is $12-14 a pound, so $3.99 is fantastic even for here.

Goodgarden survivalwstyle
Aug 15, 2011 - 9:13pm

Hams

pPon seeing your post, I drove over to my local Walgreens and bought 13 of these hams for the advertised price of $2.29. Thanks! These are a very good food storage item.

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