Friday’s COT report will help clarify where we stand in the developing COMEX positioning drama. As of yesterday’s cutoff, total open interest rose for the reporting week in COMEX silver by more than 17,000 contracts and fell by nearly 22,000 contracts in COMEX gold futures. I still believe the big changes in total open interest in gold were spread related and that also may be the case in silver to a certain, but different degree. Prices were steady to slightly higher in silver, compared to gold, in the reporting week just ended, but not excessively so, although silver prices remained and closed above the 200-day moving average barrier, but have yet to do so in gold. Thinking like a technical fund (if possible), I imagine I would have been a buyer in the past reporting week.
While I can’t put firm numbers on it, the focus will be on what the managed money longs did in each market. The possibility of a price take down still exists, due to the managed money longs that have been recently added getting flushed out (assuming any newly added managed money longs are of the technical fund variety). However, considering the lopsided nature of the risk/reward equation in silver presently, I am still convinced that, at least for me, it is not worth the chance of sidestepping a temporary market detour lower and risk not being fully aboard a long term upward journey that could begin at any time.
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