Friday, April 29, 2011

Significant COMEX Commercial Short Covering for Silver

Lowest commercial net short position of 2011. 

Lowest relative commercial net short position since April 2009. 

HOUSTON -- As Silver blasted all the way up to $49.75 on Monday, April 25, then fell sharply last Tuesday to as low as $44.60 before settling at $45.45, the highest close for silver on a COT date in our records,  we can document a significant amount of commercial net short covering.   As of Tuesday, April 26, the largest of the largest commercial futures hedgers and short sellers, (the legacy "Commercial" category, the Producer/Merchant commercials and the Swap Dealers combined in a single category), reported holding a collective 42,534 contracts net short silver (LCNS).  That is down 10,158 contracts or 19.3% from the prior week’s report.

(Silver LCNS. Source CFTC for COT, Cash Market for silver.) 

How very interesting to see the LCNS falling sharply as the price of silver was challenging and then pulling back from its former all time nominal highs near $50.  Tuesday’s reading is the lowest commercial net short position for silver futures of 2011.  The relative commercial net short position (the LCNS compared to the total open interest of 143,341 contracts) fell to a low 29.7%, the lowest for that indicator since April of 2009 with silver then trading just above USD $12.  

Clearly the large commercial hedgers have been forced to the buy side by rising prices of late.  Either that or they took advantage of the Tuesday sell-down to get the heck "outta Dodge."  Certainly, as of Tuesday, the Big Sellers of silver futures were NOT willing to increase their net short bets with silver heading for a historic high.

If the Big Sellers are unwilling to fade the rally, we marvel at the "guts" of whoever is on the sell side of the silver juggernaut.     

We plan to update all of our linked technical charts for Vultures (Got Gold Report Subscribers) over the weekend, including our shorthand notes about the COT report, probably by the usual time target of 18:00 ET Sunday evening.   Vultures can access all the GGR charts by logging in and clicking on the respective links. 

That is all for today, but there is more to come.   


The Original
Vulture Speculator

Trading gold, silver and mining shares since 1980 with a focus on taking advantage of volatility extremes, Gene Arensberg analyses the markets through a basket of technical and fundamental indicators and shares his findings from time to time here at Got Gold Report. Mr. Arensberg has been quoted in the Wall Street Journal, Dow Jones MarketWatch, USA Today and dozens of other news organizations.

"I've been a huge fan of Gene and his amazing work for years..."

Brien Lundin, CEO, Jefferson Financial, Host of the annual New Orleans Investment Conference and Publisher of Gold Newsletter

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