JP Morgan, at least according to the daily Comex warehouse report, added over half a million ozs of silver to its ‘historic’ stash of silver at the Comex: TF Metals Report. It would be even more interesting to see an actual independent accounting of that specific metal which would track the serial numbers on the bars to the legal owner of title.
I’ve been hedged in my mining stock portfolio since early September. The signal for me to hedge is the reliable Comex bank ‘net short’ position as reported in the weekly Commitment of Traders report. Since late summer, the bank net short position, and the corresponding hedge fund ‘managed money’ net long position, has been at an extreme level.
Historically this is the signal that the Comex banks will implement what I call a ‘COT open interest liquidation’ take-down of the gold/silver price using Comex paper to trigger hedge fund stop-loss positions. This enables the Comex banks to cover their shorts and print huge profits. It’s also illegal trading activity but that’s for another day.
In early September, in ‘eyeballing’ the gold chart in conjunction with the historical COT data I have set up in a spreadsheet back to 2004 , I figured that the open interest – which was in the high 500,000’s at the time – needed to come down at least 100-150k contracts. I thought it would take a price take-down from $1320 to $1230/$1240.
This post was published at Investment Research Dynamics on November 8, 2017.