The possibility of a sell off in gold and silver caused by the deterioration in the market structure, as indicated in last week’s article, was quickly realized. In a three-day period, gold sold off $30 and silver declined almost 90 cents from the recent price peaks. As usual, the explanation for the sell off was found in the Commitment of Traders Report (COT).
The most recent COT, for positions held as of July 24, showed an increase in the commercial net short position in silver, and especially in gold, where the weekly increase was the largest in memory. How any market observer could not trace the sharp decline in gold and silver prices to the engineering by the dealers is beyond me.
The good news is that, particularly in silver, the sharp price decline appears to have allowed the commercial net short position to be significantly reduced, perhaps to the extreme low readings of a few weeks ago. Of course, we must wait until the next COT report to see if this is true. In the meantime, given the recent relative price weakness in silver compared to gold, switching of gold into silver is reaffirmed.
What we don’t have to wait for is further confirmation that the silver market is manipulated by virtue of the outsized concentrated short position. In fact, a new and ugly record was set in the latest COT. The 4 or less largest traders’ net COMEX futures position grew to 52,864 contracts, or the equivalent of more than 264 million ounces.
The most recent COT, for positions held as of July 24, showed an increase in the commercial net short position in silver, and especially in gold, where the weekly increase was the largest in memory. How any market observer could not trace the sharp decline in gold and silver prices to the engineering by the dealers is beyond me.
The good news is that, particularly in silver, the sharp price decline appears to have allowed the commercial net short position to be significantly reduced, perhaps to the extreme low readings of a few weeks ago. Of course, we must wait until the next COT report to see if this is true. In the meantime, given the recent relative price weakness in silver compared to gold, switching of gold into silver is reaffirmed.
What we don’t have to wait for is further confirmation that the silver market is manipulated by virtue of the outsized concentrated short position. In fact, a new and ugly record was set in the latest COT. The 4 or less largest traders’ net COMEX futures position grew to 52,864 contracts, or the equivalent of more than 264 million ounces.
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