Pittsburg, Kansas | They are starting to unwind their short positions it looks like to me. If they unwind completely will the next step will to be go long and go with the momentum?????? They still have a ways to go to get all the way out though. From Ed Steer's Gold & Silver Daily :
Well, gold's open interest numbers for Thursday exceeded my wildest expectations. Gold o.i. fell by an astonishing 19,109 contracts. Volume was right up there again at 320,192 contracts traded. Silver's open interest declined 2,438 contracts on really decent volume of 49,788 contracts.
The Commitment of Traders Report [for positions held at the close of trading on Tuesday, January 26th] was a sight to behold, as the bullion banks reduced their net short position in silver by a very large 6,979 contracts. The did this by covering 4,692 short positions and by adding 2,287 contracts to their long position... which I knew they were doing to cover their tracks. [Add to that the 2,438 contract decline from Thursday... and silver's o.i. dropped quite a bit this week.] Not including Thursday's o.i. decline, the net short position in silver is down to 54,711 contracts... 273.6 million ounces.
To give you an idea of how concentrated the positions of the '4 or less' or '8 or less' bullion banks are in silver... the '4 or less' bullion banks are short 294.1 million ounces and the '8 or less' bullion banks are short 340.3 million ounces of silver. These amounts represent 107.5% and 124.4% of the net short position. What this means in plain English is that if the '4 or less' and '8 or less' bullion banks weren't there as the shorts of last resort... and what I call 'not-for-profit sellers'... the price of silver would explode to the outer edges of the known universe.
In gold [for the week that was] the bullion banks decreased their net short position by a respectable 25,029 contracts. This they did by covering 22,734 shorts and buying 2,295 longs. [Plus they've improved their net short position another 29,000 contracts on Wednesday and Thursday as well!] Not including Wednesday and Thursday, the gold net short position is down to 248,618 contracts... or 24.9 million ounces of gold. [And is down to 22.0 million ounces if you take out Wednesday's and Thursday's o.i. decline.]
Using the actual COT numbers, the '4 or less' and '8 or less' bullion banks in gold are short 20.4 and 25.1 million ounces of gold respectively. With the net short position being 24.9 million ounces... the '8 or less' bullion banks are basically short a bit more than the entire net short position. If they weren't there, the Commercial category of the COT report would be market neutral.
John
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Gold...hanging by a thread
