Gold & Silver COT Report 2/8/13: Commercial Increase Net Short Position in Silver to 260 Million Ounces!

Submitted by SD Contributor Marshall Swing:

Gold & Silver COT Report 2/8/13:

Commercials added 889 long contracts to their total on the week and increased a sizeable 2,568 shorts to end the week with 47.70% of all open interest, an increase of 0.21% in their share since last week, and now stand as a group at 259,730,000 ounces net short, which is an increase of 8,395,000 net short ounces from the previous week. 

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Large speculators sold off 640 longs and 1,697 short contracts increasing their net long position to 179,305,000 ounces, an increase in their net long position of just over 5.2 million ounces from the prior week.

Small speculators increased 637 longs to their total and a mere 15 short contracts for a net long position of 80,425,000 ounces an increase of just over 3 million ounces net long from the prior week.

Silver had a wild week this reporting period although from its opening at $31.41 price only increased to $31.80  There were wild swings up and down to very nearly the same price point and I have referred to these as “readjustments” in previous reports.  This idea of moving price up very, very high or equally low within about 1 hour on a trading day serves to rob speculators of their shorts while commercials are able to take new short positions on the high and profit from them on the low.  My speculation into this trading strategy is based on the number of contracts traded during those brief time periods and it is only the commercials who have the financial ability to induce such heavy volume within a short duration of time.

Silver is approaching a very high net short position in the commercials and that means one of two possibilities.  They will either use these positions to maintain price where it is currently or take price lower.  It has been interesting, over the last 3 weeks, to watch them increase their net short position dramatically while price has actually dropped during this timeframe.  Usually the only time they increase their net short position is when price goes up as they buy shorts in response to speculator long buying then crash the price to profit off their short positions.

In gold, the commercials sold off big positions in both longs and shorts and their percent of total open interest decreased from 56.49% to 54.86%  It is rare to see such a huge decline in one week of over 1.5%  The gold large specs bought in long very heavily with 11,703 contracts with price ending at $1673 Tuesday afternoon and now price is at $1668  On Thursday, we saw gold drop about $14 in early morning trading then go up more than $15 with an hour.  That was purely a move by the commercials to dislodge those longs bought by the speculators.  There were 30,000 contracts traded the first hour then 27,000 contracts traded the next half hour.

Such blatant manipulation.