In this week’s ‘Days to Cover’ chart, the Big 4 traders are short about 111 days of world silver production, about unchanged from last week’s COT Report. The ‘5 through 8’ large traders are short an additional 49 days of world silver production, down about 4 days from last Friday’s report, for a total of about 160 days that the Big 8 are short — and obviously down about 4 days from last week’s COT Report.
[Note: That 4 day drop in the Big ‘5 through 8’ category is entirely due to the fact that one of Managed Money traders covered enough short positions to remove themselves from that category, leaving only one Managed Money trader left. That fact somewhat distorts the above numbers — and the numbers that follow…but is much less of a factor now than it has been in the past.]
That 160 days that the Big 8 commercial traders are short, represents a bit over five months of world silver production, or 344.0 million troy ounces of paper silver held short by these eight traders…one of which is still a Managed Money trader.
In the COT Report above, the Commercial net short position in silver was reported by the CFTC at 140.0 million troy ounces. As mentioned in the previous paragraph, the short position of the Big 4/8 traders is 344.0 million troy ounces. So the short position of the Big 4/8 traders is larger than the Commercial net short position by 344.0-140.0=204.0 million troy ounces…down 28.7 million troy ounces from last week’s COT Report…5,740 COMEX contracts.
This number is distorted a bit by the incursion of that Managed Money trader into the Big ‘5 through 8’ short category. Ted says that a more realistic number of long contracts held by his raptors would be around 165 million troy ounces…which is still massive.
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 just under 28 days of world silver production each, on average…unchanged from last Friday’s report. The traders in the ‘5 through 8’ category are short 49 days of world silver production in total…just over 12 days of world silver production each on average — and down about 1 day from last week’s COT Report…all because of the one Managed Money trader that dropped out of that category during the reporting week.
The Big 8 traders are short 46.4 percent of the entire open interest in silver in the COMEX futures market, which is down a bit from the 47.8 percent they were short in the last COT report. And once whatever market-neutral spread trades are subtracted out, that percentage would be a bit over the 50 percent mark. In gold, it’s 43.8 percent of the total COMEX open interest that the Big 8 are short, up a tiny bit from the 43.4 percent they were short in last Friday’s COT Report — and very close to the 50 percent mark once their market-neutral spread trades are subtracted out.
In gold, the Big 4 are short 44 days of world gold production, down 2 days from last Friday’s COT Report. The ‘5 through 8’ are short 29 days of world production, unchanged from last week…for a total of 73 days of world gold production held short by the Big 8 — and down 1 day from last Friday’s COT Report…as strange as that looks. But that’s what Nick’s data shows. Based on these numbers, the Big 4 in gold hold about 60 percent of the total short position held by the Big 8…down about 1 day from last Friday’s 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 69, 78 and 71 percent respectively of the short positions held by the Big 8…the red and green bars on the above chart. Silver is up 1 percentage point from last week…platinum is unchanged from a week ago — and palladium is down about 6 percentage points week-over-week.
The status quo remains basically unchanged. The Big 4/8 traders are still sitting there like a lump — and very firmly stuck on the short side in both gold and silver. However, they did improve their short position in gold by a decent amount for the second week in a row. But as to how much they improved in silver is up in the air because the Big 8 shorts are no longer all commercial traders…contaminated by that remaining Managed Money trader in their midst. Based on that fact, it’s impossible to tell how well they made out. My guess, based on the change in the commercial net short position this week, is that they didn’t do much…especially in the Big 4 category, as it’s a pure commercial number now — and there was no change in it during the reporting week. Any changes in the ‘5 through 8’ category really don’t matter much, as the Big 4 commercial shorts dominate, as per the Days to Cover chart above.
As I keep pointing out — and will mention again, the Big 4/8 shorts will never be able to extricate themselves fully from the short side, if that was ever their intent…particularly the Big 4. 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 they 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. Ted says that a lot of them aren’t.
So 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, the U.S. Treasury or the Fed, their potential loses can only be imagined…think LME nickel times 20 or more, according to Ted. But I very much doubt that it will be allowed to happen, especially for the ‘too big to fail’ bullion banks in the Big 4 category.
As I keep saying, what happened on the LME involving the nickel market will most likely be a template for what will occur over at the CME Group at some point, as they rush to protect the big shorts on any runaway price activity to the upside, as that’s their primary function.
But as of this moment, there are no upside daily limits as to how high gold and silver prices can rise in the COMEX futures market. They can rally any amount…or until the CME steps in to save the shorts.
But as I keep saying in this spot every Saturday, the circumstances in silver have been altered by an unimaginable [and monstrously bullish] amount by Ted’s discovery of the approximately 1 billion troy ounce physical short position in silver that Bank of America appears to hold in the OTC market…along with the big increase in Goldman’s derivatives position in silver in that market, as shown in the latest OCC Report for Q4/2021…which Ted figures is a long position.
The new OCC Derivatives Report for Q1/2022 should be out in about two weeks — and we’ll see what the lay of the land is then.
He has also come to the conclusion that BofA is short about 30 million troy ounces of gold in the OTC market as well.
The situation regarding the Big 4/8 commercial shorts in silver, gold [and in platinum for those commercials in the Producer/Merchant category] 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.