Commercials added 3,821 long contracts and covered 323 shorts to end the week with 48.66% of all open interest -111,765,000 ounces net short, a huge decrease of over 20,000 ounces, according to the US Commodity Futures Trading Commission.
Large speculators netted added 862 contract longs and covered -2,798 shorts for a net long position of 82,355,000 ounces, a dramatic reduction of almost 10,000 from the previous week.
Small speculators were blasted out of -3,715 longs last period and tricked out of -1,507 shorts for a net long position of 29,410,000 ounces a decrease of over 10,000 ounces from the prior week.
In the disaggregated commercials, the producer/merchant reduced their net short position by about -7,000 ounces while the swap dealers increased about 8,000 ounces net long.
Just as I predicted, last week, the small speculators would get absolutely killed. Whoever is trying to play the commercial’s game is almost always going to lose. They only lost -1,507 of the shorts they accumulated the previous period and they were lucky and should have covered those shorts by now if they are smart. Chances are they are not because they expect the producer/merchants to drop the price again in hopes they can cash in, however, as we know from this COT, the large speculators also went short when the commercials have gone long 3,821 contracts. That certainly means that price is going to rise and just long enough to squash the large speculators and maybe also the remaining shorts of the small speculators and give the commercials a tidy profit of a couple of tens of millions. Of the commercial longs, 2,060 belong to the producer/merchant so don’t expect price to continue down so they will be out of the money.
What are these little large and small speculators thinking? The only way to beat the commercials at their game is to go long and stay long. See you next week.
Marshall Swing is a long time precious metals investor and technical analyst, having specialized in database systems. Marshall lives near St. Louis and also enjoys cycling and mountain biking. He can be contacted by email at MSwing@MarshallSwing.com.