Managed Money Short Positions Gold/Silver

To follow up on this post, I have started to monitor the managed money short positions every week for gold and silver because it’s very interesting to see what is happening.

As gold and silver were smashed down last week because technical resistance was broken, we see that the short positions have increased this week (red lines go up).

For silver, the short positions are now so high, it doesn’t even fit on the graph of the Got Gold Report.
For gold the short positions are at the peak again.

If gold ever shoots up (due to the ECB money printing), the short covering in gold will be strong, but the short covering in silver would be unimaginable.

Here are the historic values from Got Gold Report:

Numbers can be found here: http://www.cftc.gov/dea/futures/other_lf.htm

Managed Money Short Positions: Predicting Short Squeezes in Gold and Silver

What do we look at when we want to know if there will be a short squeeze to the upside in gold and silver?

Well, we look at the managed money short positions. These are the hedge funds and commodity trading advisors (CTA’s). If these people go short, then the price goes down and when the get long again, the price goes up.

You can find all info on the COT report site.

For example, the chart (May 28 2014) below indicates that there are a record amount of silver shorts at this moment. Each peak in the blue chart marks a bottom in silver price. So at least we will see some sort of price spike in the coming weeks in silver, when these hedge funds go long again from a record short positioning. This chart confirms to me that silver is cheap at this moment and it confirms why the premiums on silver are so high at this moment, while U.S. mint sales of silver outstrip the gold sales.

Managed money short positions silver

You can always find the latest numbers here. The latest managed money short number is 38453 shorts, which is a record high number of silver shorts, even higher than in the chart above. There is potential for a good short squeeze.

Silver COT report

As for gold, the last chart I could find is from March 2014. But you can always find the latest numbers here.

Managed Money Short Positions Gold

The latest number for the managed money gold shorts is 53577. If you compare that to the chart above, that’s also a pretty high number. So again, there is a potential for a short squeeze a few weeks from now.

Gold COT report

So now you will have another report to look at. This will at least give you the tools necessary to predict sudden gold/silver price spikes.

Update on Silver Net Short Positions: LCNS

On Monday 6th of August, the Financial Times leaked the news that the silver manipulation probe is likely to be dropped by the CFTC. It turned out that this news was premature. One of the 5 CFTC commissioners, Bart Chilton, said on 08 August 2012 that the investigation will continue as silver manipulation did occur. The silver manipulation probe was initiated in 2008 following a number of allegation of silver manipulation. Bart Chilton already found evidence of silver manipulation in 2010 and intends to search for additional evidence of this manipulation of the silver price.

How this all connects to the CFTC’s LCNS numbers of July 2012, you can find out here.

Chart 1: LCNS Positions

Silver Net Short Positions Hit Record Low Again

In my previous article about net short silver positions I said that silver would explode upwards once the net silver short positions started to increase.

Today the June 2012 numbers came out and we see that the net short positions have not gone in an uptrend yet. 

So we wait…, until the spring suddenly unwinds.

Chart 1: LCNS Net Short Positions in Silver

Data: http://www.cftc.gov/OCE/WEB/data.htm

Silver Net Short Positions Lowest in a Decade

Today, as I navigated on GoldMoney’s website, I learned a little bit about swaps and net short positions in silver. So I searched for keywords like swap and net short position and came to a very interesting website named Gotgoldreport.com. I wanted to summarize in short what I read there.

Apparently physical silver is headed higher and this can be deducted by the net long swaps, which are at their highest point from at least 2006 onwards. You can see that in September 2007, the silver price shot upwards from $US 13/ounce to $US 20/ounce when the swaps position declined. The same happened in 2009. Now the same will happen in 2012: when swaps (blue line) goes back down, you need to prepare yourself for a move upwards in the silver price.

Chart 1: Swap Dealer Net Position Silver

The second indicator is the net short position of the large commercials (LCNS) (Chart 2). Blue line is the LCNS, pink line is the silver price. There has never been so few net short positions in the commercial traders in a decade. And each time when there is a low in net short positions (September 2005, September 2007, October 2008 and now), the silver price would spike upwards with a delay of a few months. We haven’t seen this spike upwards yet, because the net short positions are still declining, but once the blue chart reverses upwards, you can brace yourself for the biggest run upwards in silver ever.

Chart 2: Large Commercial Nets Short Position

Go to this site to get access to the long/short positions:

http://www.cftc.gov/OCE/WEB/data.htm

Here is the excel file: http://www.cftc.gov/OCE/WEB/Report%20Data/COT_Data.xls

I compiled the data myself by subtracting the long positions from the short positions and I came up with chart 3. This basically means that commercials were always net short silver throughout history. And this longer term Chart 3 also confirms that net short positions are the lowest in a decade.

Chart 3: Net Short Positions (LCNS)