A Golden Rescue on the COMEX?

Once again I was wrong about this week’s Commitment of Traders Report in silver for positions held at the close of COMEX trading on Tuesday. Although the Commercial net short position in gold decreased by the expected smallish amount, there was a tiny increase in silver once again.
But under the surface in the headline gold number, was an absolutely stunning change that both Ted and I were shocked to see. But it proves Ted’s premise that one of the smaller traders in the Big 8 category most likely had its financial back against the wall – and had to get bailed out in whole or in part by one or more the Big 4 traders. More on that shortly, as first things first.
In silver, the Commercial net short position rose once again, this time by a tiny 868 contracts, or 4.34 million troy ounces of paper silver. The Commercial net short positions stands at a new record high of 535.6 million troy ounces of paper silver.
During the reporting week, the commercial traders reduced their long position by 2,264 contracts, plus they reduced their short position by 1,396 contracts. The difference between those two numbers is the change for the week. With such a small change in the commercial net short position, there wasn’t much activity in each category. Ted said that Big 4 increased their short position by a bit more than 100 contracts – and the raptors, the commercial traders other than the Big 8, added about 800 contracts to their short position, which means that the short position of the ‘5 through 8′ traders was basically unchanged. In the grand scheme of things, these changes are not even rounding errors. Ted pegs JPMorgan’s short position at around 32,000 contracts, unchanged from his estimate last week. We get a new Bank Participation Report next Friday – and that will enable Ted to calibrate their short position more precisely.
Under the hood in the Disaggregated COT Report, things were quite a bit different, as the Managed Money traders added a whopping 5,200 contracts to their already gargantuan [and record] long position, plus they increased their short position by 428 contracts, for an increase on the week of 5,200-428=4,772 contracts, which was almost six times the increase in the Commercial net short position. Of course to make up for that, the traders in the ‘Other Reportables’ and ‘Nonreportable’/small trader categories had to go short the difference – and that’s what they did. Ted was wondering out loud as to who those traders in the Managed Money might be that were piling in on the long side so enthusiastically. I mentioned those ‘unblinking long’ non-technical traders as a possibility – and I just know that he’ll have more to say about this in his weekly commentary later today.

This post was published at GoldSeek on 30 July 2016.