COMEX Traders Classed as Managed Money Short Positions in Gold, Silver
HOUSTON – We had not planned to do a report this weekend, but given the Friday surge higher for gold and its very obvious short covering signature on short term charts, we honor a request by several Vultures (Got Gold Report Subscribers) to publish the disaggregated commitments of traders (DCOT) report charts for the short positions of Managed Money traders for gold and silver futures. The graphs follow.
For an explanation of the charts’ relevance one can review the DCOT video update we published last week on Memorial Day Monday.
Managed Money Short Positions for Gold
Managed Money Short Positions for Silver
As we mentioned in the video, we believe that the normally net long Managed Money traders (hedge funds, commodity trading advisors and other funds that trade futures on behalf of others) used short positions to hedge longer term long positions (as gold and silver fell to near their implied support levels) and thus the very high short positions act as 100-octane rally fuel for when gold or silver catch a convincing bid.
If The Funds believe that gold and silver have put in a trading bottom and are indeed about to move significantly higher, we can presume they will be in a hurry to buy back those short hedges – a condition that could lead to heavier than normal buying pressure for futures and a rapid escalation in the price. We undoubtedly saw a taste of that on Friday.
The Funds increased their pure short positions from Tuesday to Tuesday to a 4-year high for gold and a 5-year high for silver futures. So the pent up buying “horsepower” from the long side following the major correction for gold and silver is enhanced by the apparent additional buying horsepower represented by the very high short positions shown in the graphs above.
Widely followed BMO strategist Donald Coxe mentioned the very high short positions in his King World News interview linked in the post just below this one. He also noted the strong outperformance of some large mining shares to gold metal, suggesting that is a positive, confirming signal for gold and hints that the similarly high short positions for mining shares are also seeing some "coverage."
The very high managed Money short positions also suggest that further dips in price should be very well bid just ahead, as traders use any dips to cover those short bets.