Ted Butler Quote of the Day 09-09-16

While this was the largest weekly reduction in the gold commercial headline number in 14 weeks (since May 24), it is important to recognize that any reading around 300,000 contracts net short is historically extreme and typically bearish. That’s where we’ve been for more than two months. Therefore, it’s closer to the truth to say we’ve been in a broad trading range in price and in a market structure historically extreme over that time in both gold and silver.

And while the concentrated short position of the 4 largest gold traders is down this week, even more astounding is that the big 5 thru 8 position is also down big again. From July 12, the net short position of the big 5 thru 8 is down from over 100,000 contracts to under 65,000 contracts this week. Against that record drop, the big 4 in gold have increased their net short position by 14,000 contracts, a necessary consequence of preventing a gold price explosion. Not only does this reconfirm the failure of a big 5 thru 8 gold trader, it represents a remarkable level of concentration on the short side of COMEX gold, despite this week’s reduction in big 4 shorting.

Here we have the total commercial gold net short position at a historically extreme 300,000 contracts, with more than 202,000 of those contracts held short by only 4 traders. The math should jump out at you – two-thirds of the historically extreme COMEX commercial net short position in gold is held by only four traders. The COMEX is the world’s largest gold exchange and as such would be thought to be comprised of many thousands of participants. How is it possible that only 4 traders can hold two-thirds of the entire commercial net short position? Is there no level of market concentration that is too much for the regulators, short of one trader holding 100% of one side of a market?

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