Friday, April 27, 2012

Gold and Silver Disaggregated COT Report (DCOT) for April 27

• Also this week, Legacy Combined Commercial COT (LCNS) 

HOUSTON -- This week’s Commodity Futures Trading Commission (CFTC) disaggregated commitments of traders (DCOT) report was released at 15:30 ET Friday.  Our recap of the changes in weekly positioning by the disaggregated trader classes, as compiled by the CFTC, is just below.  This week we also include the graphs and changes for the combined commercial net short positioning or LCNS, the "Legacy COT" report. 

In the DCOT table below a net short position shows as a negative figure in red. A net long position shows in black. In the Change column, a negative number indicates either an increase to an existing net short position or a reduction of a net long position. A black figure in the Change column indicates an increase to an existing long position or a reduction of an existing net short position. The way to think of it is that black figures in the Change column are traders getting “longer” and red figures are traders getting less long or shorter.

All of the trader’s positions are calculated net of spreading contracts as of the Tuesday disaggregated COT report.


(DCOT Table for Friday, April 27, 2012, for data as of the close on Tuesday, April 24.   Source CFTC for COT data, Cash Market for gold and silver.) 


Vultures, (Got Gold Report Subscribers) please note that updates to our linked technical charts, including our comments about the COT reports and the week’s technical changes, should be completed by the usual time on Sunday evening (around 18:00 ET).  

As a reminder, the linked charts for gold, silver, mining shares indexes and important ratios are located in the subscriber pages.  In addition Vultures have access anytime to all 30-something Vulture Bargain (VB) and Vulture Bargain Candidates of Interest (VBCI) tracking charts – the small resource-related companies that we attempt to game here at Got Gold Report.   Continue to look for new commentary directly in the charts often. 

Combined (legacy, not disaggregated) Commercial Net Short Position for Silver, then Gold below.  Source CFTC for COT, Cash market for gold and silver. 

Combined Commercial Net Short positioning (LCNS) for silver futures (including Swap Dealers) fell a quite large 4,144 lots to a very low 22,353 contracts net short (111.8 million ounces), a reduction of 15.6% w/w, as silver declined 86-cents or 2.3% from $31.67 to $30.81 Tuesday to Tuesday.


 Actually 1,562 contracts of the decrease in commercial silver LCNS can be attributed to an increase in Swap Dealer net longs, who now report being net long 14,094 contracts (70.5 million ounces). Traders classed by the CFTC as Producer/Merchants, including bullion banks, covered or offset 2,582 lots to show 36,447 contracts net short (182.2 million ounces), which is not an “aggressive” amount of hedging historically speaking.

The LCNS as a percentage of all silver contracts open (LCNS.TO) fell to an extremely low and potentially contrary bullish 18.27% - the lowest since January 3 (14.9% then).

The LCNS for gold futures also fell by 8,854 contracts or 5% to an unusually low 167,237 contracts net short as gold edged $7.63 or 0.5% lower to $1,641.66 Tuesday to Tuesday. This, as the open interest for COMEX gold futures fell to its lowest level (395,389 contracts open) since September 1, 2009 (384,703 open then).


Note that the combined commercials (the entities whose job it is to hedge metal inventory on hand or managed for others, metal sold/bought forward, metal for delivery, metal in shipment/transit, metal anticipated to be needed and metal backing a myriad of financial derivatives), are very near their lower limits of net short positioning relative to the past three years of previous trade.

To us that suggests that the Big Hedgers are not, repeat not, positioning as though they expect gold and silver to move materially lower.  To the contrary, if the Big Hedgers thought that gold and silver were heading much lower we would expect them to be positioning for it with higher, not extremely low net short positions.  

(Edit at 19:40 CT.) Speaking of the open interest for gold futures we find it remarkable and very interesting that the COMEX open interest for gold futures has declined for eight consecutive weeks, reflecting an apparent spec migration from gold futures elsewhere.

From February 28 to April 24 the gold open interest fell 83,655 lots from 479,044 to 395,389 contracts open, a reduction of 17.5%.


What is remarkable about that is that the price of gold has not “answered” the continued fall in the open interest in a material way.

Gold closed February 28 at $1,783.83 and fell $109.85 or 6.2% the following week to $1,673.98. The open interest plunged 35,795 contracts that week also, and has continued to decline another 47,860 lots in the seven weeks since. But instead of breaking down with the evaporating open interest in gold futures, gold has found willing bidders (likely including some central banks) above the $1,600 level. Indeed, as measured on COT reporting Tuesdays, gold has remained in a $1,640 to $1,680 trading range since March 6 as the open interest fell.

We believe that is an indication there have been and likely still are substantial and determined bidders for gold on most any significant dip. 

That is all, carry on.

Gene Arensberg for Got Gold Report  


Edit Apl 30 to correct a date typo in the DCOT chart. 



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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