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Sunday, 07/16/2017 2:46:03 PM

Sunday, July 16, 2017 2:46:03 PM

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The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, certainly lived up to its advanced billing...at least in the Legacy COT Report. But under the hood in the Disaggregated COT Report, things were a little strange. Not that it matters, I suppose, but the Managed Money traders didn't follow their normal script.

In silver, the Commercial net short position dropped by 14,661 COMEX contracts, or 73.3 million troy ounces of paper silver. They arrived at that number by increasing their long position by 3,956 contracts, plus they covered a chunky 10,705 short contracts. The total of those two numbers is the change for the reporting week.

Ted said that the Big 4 decreased their short position by about 4,500 contracts. It probably would have been a much larger number, but it's a near certainty that there's a Managed Money trader with a short position big enough to be included in this category. And with the July Bank Participation Report [BPR] in hand, along with the Big 4 trading data since the June BPR in hand as well, Ted sets JPMorgan's short position at 10,500 contracts...give or take a thousand or so. I'll have more about this, in my discussion on the Bank Participation Report further down. Continuing on, the '5 through 8' large traders only decreased their short position by around 1,000 contracts -- and that's because there's at least one Managed Money trader contaminating this category as well. But the real heavy lifting during the reporting week was done by Ted's raptors, the Commercial traders other than the Big 8, as they added a healthy 9,200 long contracts to their almost-record long position.

The surprises were under the hood in the Disaggregated COT Report, as the Managed Money traders only accounted for 7,527 contracts of the change in the Commercial net short position, which is a little over half. They arrived at that number by selling 4,099 long contracts, but they only added 3,428 contracts to their short position. I was expecting a bigger 'add' to their short position than that. The 7,100 contract difference came from the 'Other Reportables' and 'Nonreportable/small trader categories, as the former went net short by about 4,750 contracts -- and the latter group dumped about 2,390 long contracts. Ted was wondering out loud on the phone whether or not there may have been a reporting error, but the numbers are what they are -- and all that really matters when all is said and done, is the change in the Commercial net short position.

Ted was somewhat disappointed that the non-technical Managed Money traders sold as many long positions as they did during the reporting week...4,099 contracts. This reduced their long position down to 55,700 contracts. But considering how savage the attack on the silver price has been over the last few weeks, I'm not all surprised that even some of these deep-pocket traders were forced to throw in the towel.

The Commercial net short position in silver is now down to 24,567 contracts, or 122.8 million troy ounces of paper silver. And once you factor out the extra 30,000+ non-technical funds Managed Money longs that have been added over the last three years, this report is, with out a word of a lie, the most wildly bullish in COMEX history...especially for JPMorgan.

Here's the 3-year COT chart.




In gold, the commercial net short position declined by 33,310 contracts, or 3.33 million troy ounces of paper gold. They arrived at that position by purchasing 16,628 long contracts, plus they covered another 16,682 short contracts -- and the sum of those two numbers is the change for the reporting week.

Ted said that the Big 4 traders only covered around 4,000 contracts -- and the fact that these four bullion banks still hold a huge short position after this engineered price decline of the last month or so, I still find worrisome. I expect that Ted will have a comment or two about it in his weekly review this afternoon. The big surprise was that the '5 through 8' large traders actually added about 2,500 contracts to their short position. Whether there's a Managed Money trader in this group is unknown but, like the Big 4, I'm not at all amused by the short position of the '5 through 8' traders either. And, like in silver, it was Ted's raptors, the commercial traders other than the Big 8, that did the monster lifting during the reporting week, as they added an eye-watering 31,800 contracts to their long position.

Under the hood in the Disaggregated COT Report, there were even bigger surprises in gold, as the Managed Money traders only accounted for 10,467 contracts of the total change in the commercial net short position. The difference between that number and the commercial net short position is around 22,800 contracts -- and it was the traders in the 'Other Reportables' category that accounted for every contract of it, plus a bit more. They increased their net short position by about 23,100 contract. The traders in the 'Nonreportable'/small trader category made up the tiny difference of several hundred contracts.

These changes in the 'Other Reportables' category in gold, like in silver, appear counterintuitive -- and it remains to be seen if a correction is made in next week's report. But as I stated regarding silver, the numbers may be what they are, regardless of what Ted and I expected them to be.

The commercial net short position in gold is down to only 7.39 million troy ounces. I haven't seen that small a number in many, many years -- and I know that Ted will have the exact date in his column later today.

Here's the 3-year COT chart for gold -- and like its silver counterpart, it's set up for a rocket ride higher as soon as JPMorgan et al allow it.




Except for the 'hinky' things...as Ted put it...going on in the Disaggregated COT Report, the numbers you see above couldn't possibly get more extreme than they are now. Of course, if 'da boyz' really wanted to hammer prices lower, I suppose they could. But at these levels, the law of diminishing returns is in full force -- and if I had to bet the proverbial ten dollar bill, I'd happily bet it on the fact that lows for this move down are already in place.

Here’s Nick Laird’s “Days to Cover” chart updated with yesterday’s COT data for positions held at the close of COMEX trading on Tuesday. It shows the days of world production that it would take to cover the short positions of the Big 4 — and Big ‘5 through 8’ traders in each physically traded commodity on the COMEX. These are the same Big 4 and ‘5 through 8’ traders discussed in the COT Report above.




For the current reporting week, the Big 4 are short 102 days of world silver production—and the ‘5 through 8’ large traders are short an additional 57 days of world silver production—for a total of 159 days, which is just over five months of world silver production, or about 386.3 million troy ounces of paper silver held short by the Big 8. [In last week's report the Big 8 were short 170 days of world silver production.

In the COT Report above, the Commercial net short position in silver was reported as 122.8 million troy ounces. The short position of the Big 8 traders is 386.3 million troy ounces. The short position of the Big 8 traders is larger than the total Commercial net short position by a chunky 386.3-122.8=263.5 million troy ounces. The reason for the difference in those numbers is that Ted's raptors, the commercial traders other than the Big 8...are long that amount!

As I also stated in the above COT Report, Ted pegs JPMorgan's short position at around 10,500 contracts, or around 52.5 million troy ounces, which is down from the 15,000 contracts they were net short in the previous week's report. 52.5 million ounces works out to around 22 days of world silver production that JP Morgan is short. That's compared to the 159 days that the Big 8 are short in total. JPM is short about 14 percent of the entire short position held by the Big 8 traders. This percentage figure has been dropping steadily for weeks.

I estimate the approximate short position in silver held by Scotiabank at approximately 43 days of world silver production. So Scotiabank continues in its role as the No. 1 silver short in the COMEX futures market -- and by a very wide margin now.

The two largest silver shorts on Planet Earth—JP Morgan and Canada’s Scotiabank—are short about 65 days of world silver production between the two of them—and that 65 days represents about 64 percent of the length of the red bar in silver in the above chart...just under two thirds of it. The other two traders in the Big 4 category are short, on average, about 18.5 days of world silver production apiece. The four traders in the '5 through 8' category are short, on average, just over 14 days of world silver production each.

The short positions of Scotiabank and JPMorgan combined, represents about 41 percent of the short position held by all the Big 8 traders. How's that for a concentrated short position within a concentrated short position?

The Big 8 are short 37.3 percent of the entire open interest in silver in the COMEX futures market -- and that number would be a bit under 45 percent, once the market-neutral spread trades are subtracted out. In gold, it's 38.5 percent of the total COMEX open interest that the Big 8 are short.

For the sixth time in seven weeks, the Big 8 are short a larger percentage of total open interest in gold than they are in silver.

In gold, the Big 4 are now short 48 days of world gold production, which is down from the 49 days that they were short last week — and the ‘5 through 8’ are short another 17 days of world production, which is unchanged from what they were short from the prior week, for a total of 65 days of world gold production held short by the Big 8 -- down from the 66 days the were short in last week's report. Based on these numbers, the Big 4 in gold hold about 74 percent of the total short position held by the Big 8, unchanged from the prior week's COT Report.

The “concentrated short positions within a concentrated short position” in silver, platinum and palladium held by the Big 4 are about 64, 62 and 67 percent respectively of the short positions held by the Big 8. Silver and platinum are both down 1 percentage point from the last reporting week -- and palladium is unchanged for the fourth week in a row.


http://news.goldseek.com/GoldSeek/1500253200.php

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