[NOTE: As mentioned in the COT Report above — and for the sixth week in a row, the Big 8 shorts are no longer all commercial traders — and that’s because the short position of at least one, if not two of the biggest Managed Money traders is so large, that they’re in the Big 8 commercial short category. For that reason, the numbers shown below aren’t entirely accurate, but close enough for our purposes — and will remain that way until they cover enough of their short positions to disappear from that category. – Ed]
In this week’s ‘Days to Cover’ chart, the Big 4 traders are short about 111 days of world silver production, down 5 days from last week’s COT Report. The ‘5 through 8’ large traders are short an additional 41 days of world silver production, unchanged from last Friday’s report, for a total of about 152 days that the Big 8 are short — obviously down 5 days from last week’s report. [In last Friday’s COT Report, they were short 157 days of world production.]
That 152 days that the Big 8 are short, represents five months of world silver production, or 327.4 million troy ounces of paper silver held short by the Big 8.
In the COT Report above, the Commercial net short position in silver was reported by the CME Group at 176.3 million troy ounces. As mentioned in the previous paragraph, the short position of the Big 4/8 traders is 327.4 million troy ounces. So the short position of the Big 4/8 traders is larger than the Commercial net short position by 327.4-176.3=151.1 million troy ounces…up 52.6 million troy ounces from last week’s COT Report…10,520 COMEX contracts.
The reason for the difference in those numbers is that these raptors, the small commercial traders other than the Big 8, are net long silver by that amount.
And because of the one or more Managed Money traders in the Big 8, this number is overstated by a certain amount…however it’s not overly material. It also distorts the rest of the silver numbers that follow by a bit as well.
As per the first paragraph above, the Big 4 traders in silver are short around 111 days of world silver production in total. That’s a bit under 28 days of world silver production each, on average…down a bit over one day from last Friday’s report. The traders in the ‘5 through 8’ category are short 41 days of world silver production in total…10 days and a bit of world silver production each on average — and about unchanged from last week’s COT Report.
The Big 8 traders are short 43.9 percent of the entire open interest in silver in the COMEX futures market, which is down a tiny amount from the 44.4 percent they were short in the last COT report. And once whatever market-neutral spread trades are subtracted out, that percentage would certainly be very close to the 50 percent mark. In gold, it’s 44.7 percent of the total COMEX open interest that the Big 8 are short, up a decent amount from the 41.6 percent they were short in last Friday’s COT Report — and a bit over the 50 percent mark once their market-neutral spread trades are subtracted out.
In gold, the Big 4 are short 47 days of world gold production, down about four days from last Friday’s COT Report. The ‘5 through 8’ are short 30 days of world production, up about one day from last week…for a total of 77 days of world gold production held short by the Big 8 — down about three days from last Friday’s COT Report. Based on these numbers, the Big 4 in gold hold about 61 percent of the total short position held by the Big 8…down about three percentage points from last Friday’s COT Report. [And don’t forget that one of the traders in the Big ‘5 through 8’ category is a Managed Money trader — and certainly affects two of the three numbers in this week’s gold COT Report]
The “concentrated short position within a concentrated short position” in silver, platinum and palladium held by the Big 4 commercial traders are about 73, 78 and 64 percent respectively of the short positions held by the Big 8…the red and green bars on the above chart. Silver is down about 1 percentage point from last week…platinum is down about 2 percentage point from a week ago — and palladium is down about six percentage points week-over-week.
The Big 4/8 traders are still very firmly stuck on the short side in both gold and silver — and decreased their net short positions in both by a bit during the reporting week. As Ted has been saying, it’s his raptors, the small commercial traders other than the Big 8, that are running the price management show. That was the case during this last reporting week as well — and in the many weeks preceding that…but the Big 8 were obviously active in capping their respective prices when necessary — and also covering shorts when they were able.
As I’ve pointed out before — and will mention again, it’s my firm belief that the Big 4/8 shorts will never be able to extricate themselves fully from the short side, if that was ever their intention. At some point they’re going to have eat the lion’s share of the short positions that they currently hold. The only way that can do that is to go into the market and buy longs…or deliver physical metal, but only if the long holders are in a position to accept delivery. A lot of them aren’t.
And the moment the rest of the traders in the COMEX futures market sees that, the ‘ask’ will disappear — and prices will explode…unless the powers-that-be at the CFTC and CME Group have something nefarious up their sleeves, or they’re bailed out by the likes of the Exchange Stabilization Fund. I have more on this in The Wrap.
However, the circumstance in silver has also been altered by an unimaginable [and monstrously bullish] amount by Ted’s discovery of the approximately 800 million troy ounce physical short position in silver that Bank of America now holds as of the last OCC Report.
He has come to the conclusion that BofA is also short about 30 million ounces of gold in the OTC market as well.
The situation regarding the Big 4/8 shorts in silver, gold [and platinum] continues to be far beyond obscene, twisted and grotesque — and as Ted correctly points out ad nauseam, its resolution will be the sole determinant of precious metal prices going forward.
As always, nothing else matters.