Open interest (futures & options) watch for gold silver

swissaustrian

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Sorry swissaustrian,
as I think you are gonna see one more major dip on Monday. This will start Sunday night. For what ever reason the stock futures will get Hammered before the open on Monday (Thats why they goosed the market today) (You would think the opposite would happen market down metals up. But we are dealing with criminal intent here and they have conditioned the masses that when the market deflates so do the metals. You know the old saying ? (Tell or telegraph a lie long enough and the masses will begin to believe it) Precious metals will take one more "MONSTER" plunge before the options expiry at the close of the market on Monday. Then Tuesday I still think you will see some pressure because that will be notice day (notice from the option holder that they elect to exersise the option and take physical delivery) The key for the Comex is to stop people from taking physical delivery. (I know the Comex does not settle in metal, but in cash. It's the psyc that counts) Then on Wednesday I see a start of a rebound. This whole paper market is a scam and I really think people are starting to see it. Buy half over the weekend, and half after Tueday would be my recommendation "Spread the Love" so you don't get smoked by the pressman in control of the printing press.

Good luck and thanks for the data ! :wave:
I respect your opinion, but let me provide you the link to the gold op/ex thread: http://www.pmbug.com/forum/f2/options-expiry-manipulation-gold-price-one-chart-229/
As you can see there, op/ex manipulations are usually finished before the day of the expiry. Historically, price management has been undertaken during the 5 prior trading days. I don't think that it's gonna be different this time. High Volatility at op/ex days is dangerous because it might trigger panic liquidations or short squeezes which both lead to higher costs of price manipulations. Additionally, op/ex days usually have high trading volumes, requiring a larger number of contracts to move prices. Mild volatility is therefore the cheapest way to achieve pre-managed prices at op/ex.

We could very well see a stock market plunge on Monday. The UK just got downgraded by Moody's. That has strenghtened the dollar afterhours. I don't think that it's going to rock markets like the US downgrade did, though.
 

stockjockee

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I respect your opinion, but let me provide you the link to the gold op/ex thread: http://www.pmbug.com/forum/f2/options-expiry-manipulation-gold-price-one-chart-229/
As you can see there, op/ex manipulations are usually finished before the day of the expiry. Historically, price management has been undertaken during the 5 prior trading days. I don't think that it's gonna be different this time. High Volatility at op/ex days is dangerous because it might trigger panic liquidations or short squeezes which both lead to higher costs of price manipulations. Additionally, op/ex days usually have high trading volumes, requiring a larger number of contracts to move prices. Mild volatility is therefore the cheapest way to achieve pre-managed prices at op/ex.

We could very well see a stock market plunge on Monday. The UK just got downgraded by Moody's. That has strenghtened the dollar afterhours. I don't think that it's going to rock markets like the US downgrade did, though.
Good calls mate ! The metals held up well :wave:
 

swissaustrian

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Eric King: “Jim, there are a great many pieces discussing the COT report, can you talk about that?”

Jim Sinclair: “I’m just going to ask you a question and give you a definitive answer: The question is, do you really believe the people (banks) who manipulated LIBOR are absolutely, totally, and completely honest on the figures that they render to the CFTC on the position of traders (COT)? The answer is, of course not....
Everybody in the trading industry, even those who should know otherwise, puts so much faith in looking at what they think is the commercials’ confessional. They believe they can read, through the COT, the commercials’ intentions. That’s just total nonsense. We’re living in a new normal, and one part of the new normal is that fabrication is a virtue.”
http://kingworldnews.com/kingworldn..._Gold_Will_Now_Be_Released_To_The_Upside.html
 

swissaustrian

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The new COT as of Tuesday is out. Gold was above 1600 and silver above 29 back then. The selloff since Wednesday has probably flushed out some more longs.

First gold: Speculators covered some shorts and increased their net long positions by a whopping 20%. They're still at very low net long levels, though. Commercials have increased their net short position a bit, but are still at historical lows. Open interest finally fell by 2.4%. Overall, the data for gold hasn't really changed much. It's still a fantastic setup for a rally.

Now silver: Speculators have really been flushed out of the market, rducing their net long position by 33%. We're now close to a speculator positioning that has historically indicated a bottom, see here eg last Summer: http://www.pmbug.com/forum/f13/open-interest-futures-options-watch-gold-silver-679/#post9099 . A little more liquidation would be required to create the perfect setup. It may already have happened this week from Wednesday to today. Addtionally, sit seems like there's heavy shorting going on in the over the counter market (otc) as indicated by the massive increase in the net long position of the swap dealers. That is a contrary bullish sign. Open interest also finally fell by 6.7%. It's still pretty high, though.

 

swissaustrian

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The new data is out as of last Tuesday. As expected positioning in both gold and silver has gotten even more contrary bullish:

Gold: The commercials of reduced their net short positions a bit, though swap dealers (as part of the commercials) are more short than they were a week ago. Probably their counterparities in the otc market began to cover shorts.
Speculators once again reduced their net long positions by 20% and are now at levels not seen since the 2008 crash. Open interest stayed flat.

Silver: Mild commercial short covering indicates that the hedgers are still reluctant to close too many shorts. There still some way to go before we're at commercial net short positions which are similar to previous bottoms. Speculators, however, have finally reached the bottom zone in their net long positioning reducing their net long position by 40%, although there might be additional room for a lower net long position. Open interest stayed relatively flat, too.

Summary: Paper positioning is as contrary bullish as it can get. Once we break above 1600 / 30, the race to cover shorts should create serious fireworks. :popcorn:

 

swissaustrian

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The new COT is out. I'm keeping it brief today:

Gold: While producers and merchants lowered their net short position again, swap dealers advanced heavily to the short side. This probably reflects some fresh longs by their counterparties in the otc markets (good sign). Speculators cautiously increased their net long position. Nothing special though. Open interest grew a bit.

Silver:
The commercials are standing at an unchanged position that still has some space to the downside. Silver's underperformance compared to gold this week is consistent with this observation. Speculators reduced their net long position once again while prices stayed flat. That's a good sign. Open interest was flat.

Summary
: The outlook hasn't changed and prices haven't either. We have massive short covering rally fuel. I guess we need to break out above 1600 for gold and then drag silver with it in order to cause massive short covering. 1600 has been tested three times this week and encountered selling each time. I'm confident that it could be different next week.

 

swissaustrian

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The trend in paper positioning for gold has turned together with prices.
Commercials increased their net short position, especially the Swap dealers.
Speculators furiously covered shorts, but there's much more work to do. Open interest fell, an indication for the closure of hedges by long term longs.

The story for silver is different: Not only didn't prices rise, Commercials reduced their net short position a bit. The producers/merchants still aren't willing to cover shorts. That's not a good sign. Speculators cut their net long positions again, probably by adding shorts without selling off longs, ie it's just hedging. The rising open interest confirms that assumption.

Summary: The diverging moves between gold (up) and silver (flat) are reflected in the changes in paper positioning. As always, the data is as of last Tuesday. Silver positioning of the producers/merchants still suggests that more pain might be ahead, maybe a spike into the 26 area. :paperbag:

 

MasterQ

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Well 26 has amazing support so if you got the dry powder. ;)

I'm seriously hoping the 28's hold and shake out the shorts lol!

-Q
 

swissaustrian

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New COT data as of March 26th: Quite a lot of action.

Gold: Commercials reduced their net short position by 5%. They're still at ver low levels, ie they don't feel like hedging. Speculative longs were flushed out once again. There's still massive short covering rally fuel under this market. Open interest is down a lot. That's a nice sign, too.

Silver: Producers / Merchant are once again refusing to reduce shorts significantly. They seem to be betting on a spike low below 28. Speculators are not giving up, but are reducing their net long position to just 1075 contracts which is ultra low. The stable open interest suggests that speculative longs were not liquidated, but rather hedged with corresponding shorts. That means rally fuel once we turn arround.
Chart: Speculative net long silver position at historically low levels, ie contrary bullish
 

swissaustrian

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The last two weeks, I've been warning of a spike low to 26 risk in silver and this week we got it :noevil:.

I've also been talking about the reluctance of commercials to cover shorts in silver. It finally started this week. The data below is as of Tuesday, before the final push down on Wednesday below 27 and today's spike higher on the NFP disappointment. My guess is that commercial short covering in silver has gone on and resistance from them is now less. There still might be some more volatile sidewards trading between 26 and 28 required to cover additional commercial shorts before we can really turn arround.



First Gold: Commercials reduced their net short postion by about 10% while speculators reduced their net long postion by 20%. The setup for a short covering rally is getting better and better. When (not: if) it gets going, the speed of the upmove is gonna be breathtaking. Paper postioning suggests that it is going to more violent than even last summer which was quite a quick move after we finally broke out.

Silver: As I said above, producer/merchants as part of the commercials have finally started to reduce their net short postion by 15%. That's a good start, but we need more. We may have already gotten it after Tuesday. Especially the aggressive dip buying at 26.8 looked like short covering to me. Even more important is the fact that speculators are now net SHORT silver. This a very rare event. It didn't even occur during the 2008 panic. Once silver turns arround, the fireworks are gonna be epic :popcorn: Add on to that (as I already said). The final spike into the 26 area is not part of the data. Speculators have propably even expanded their short postioning after Tuesday.

Here's Gene Arensberg's (GotGoldReport) take with additional charts:
Note: Spec Funds (Managed Money) have become net short silver futures as of this report. Note also the extremely low net short positioning of the Producer/Merchants for gold. The Producer Merchants, the category which includes bullion banks, have not had so few bets that gold would fall in price since the 2008 panic. That is the same thing as saying that the large commercial traders are currently the least fearful that gold prices will fall further since December 9, 2008, when they then held just 80,669 contracts net short with gold then near $776 the ounce.

In the DCOT table above a net short position shows as a negative figure in red. A net long position shows in black. In the Change column, a negative number indicates either an increase to an existing net short position or a reduction of a net long position. A black figure in the Change column indicates an increase to an existing long position or a reduction of an existing net short position. The way to think of it is that black figures in the Change column are traders getting “longer” and red figures are traders getting less long or shorter.

All of the trader’s positions are calculated net of spreading contracts as of the Tuesday disaggregated COT report.

If there is one particular chart of the many we review each week that we might want to call attention to, it would have to be the chart below - the gross short positioning of traders classed by the CFTC as Managed Money, aka the Spec Funds.



Because of that extremely high Managed Money silver short position, collectively the Spec Funds showed their largest ever net short, repeat net short position for silver futures since the inception of the CFTC disaggregated commitments of traders reports (data begins in 2006). As of April 2, with silver then showing a last trade of $27.26, Managed Money traders reported a net short position of 2,497 lots as shown in the chart below.



Managed Money traders have been net short silver futures before, for one reporting week on September 4, 2007, when they reported being 92 contracts net short with silver then changing hands at $12.09 an ounce. Two months later, silver had tested $15. Six months later, in March of 2008 silver had cleared $20 - just before the 2008 panic took control of the markets.


Perhaps as a "runner up" we might point to the chart below as important and noteworthy - the gross short positioning of Managed Money traders in gold futures as of Tuesday.



The Managed Money short positioning charts for gold and silver have something very much in common, in terms of what they represent.

Much more for subscribers in the chart updates this weekend.
http://www.gotgoldreport.com/2013/04/gold-and-silver-disaggregated-cot-report-dcot-for-april-5.html
 
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