SILVER COT REPORT 8/24/12: COMMERCIALS INCREASE NET SHORTS 38%, ADD A MASSIVE 45 MILLION OZ TO SHORTS
Submitted by SD Contributor Marshall Swing
Silver COT Report 8/24/12
Commercials sold off a huge -4,651 longs on the week and added a whopping 4,424 shorts to end the week with 46.48% of all open interest, a minor change of +0.35% in their share since last week, and now stand as a group at 162,385,000 ounces net short, an increase of over 45,000,000 net short ounces, or an astonishing 38% increase in their net short position in a single week!
Large speculators gorged on 3,329 longs while being forced out of -2,284 short contracts improving their net long position to 106,000,000 ounces, an increase in their net long position of over 28,000,000 ounces from the prior week.
Small speculators also had their fill of 2,676 net longs and gave up -786 shorts for a net long position of 56,385,000 ounces an increase of over 17,000,000 ounces net long from the prior week.
The commercials sold longs big time this past reporting period as they knew they had big profits secured and written in the stars. The previous two weeks they had bought about 4,100 longs and they sold that number plus over 500 more contracts for sizeable profits. But remember, the COT week always runs from Tuesday to Tuesday so in this case from 8/14 to 8/21 pit close. The price was about $29.25ish at Tuesday’s pit close this week and price now is about $30.73.
Buying massively and just prior, the commercials knew, without a shadow of a doubt, this price rise was coming and they were well prepared to profit from it.
The real question here is why sell so many longs when they could have waited a little longer and made even more profit? Is that a signal they do not expect price to run much higher or just their algorithms saying it is time to take profits on contracts that were previously bought at lower prices? Chances are they have profits at about $2 – $2.50 an ounce on 4,651 contracts. If so, that is about $46.5 million to $58 million on their sale.
Remember, the 4,651 contracts they sold may not be the same ones bought in the previous two weeks and could have been purchased at slightly lower prices than those of the previous two COTs. Prices have not been below $26 since November of 2010 and these longs sold were probably in the upper $26 range.
The combined total of longs picked up by the speculators was about 6,100 and it is very interesting that this far outnumbers the shorts picked up by the commercials at 4,424. That means the amount of shorts covered by the speculators was far higher than the numbers show and that they have also bought a significant amount of shorts to go with their long purchases. This means a subset of those speculators bought those shorts and they got creamed in the action after Tuesday of this week because price rose significantly.
As of this writing, price is at $30.73 which is $3.30 higher than the beginning of this mania 8 days ago.
It is also noteworthy there has been no serious attempt by the commercials to limit this long run.
The producer merchant’s short silver position stands at -211,620,000 ounces and they have not been this much net short since the magical date of February 28th of this year.
and.....
http://www.silverdoctors.com/harvey-organ-the-moment-london-is-out-of-silver-the-comex-will-be-out-in-a-nano-second/#more-12232
HARVEY ORGAN: THE MOMENT LONDON IS OUT OF SILVER, THE COMEX WILL BE OUT IN A NANO-SECOND!
Harvey Organ joins us again for an explosive interview discussing this week’s breakout in gold and silver, the developing ‘TREMENDOUS PHYSICAL SHORTAGE‘ in the silver market, and concerns with unallocated gold and silver accounts, which Harvey describes asnothing but paper notes and obligations.Harvey also discussed recent reports that the LBMA is refusing to deliver silver outside of the LBMA system: They won’t deliver it outside of the system because there is no silver! That’s a real crisis! The moment London is out of metal, the COMEX will be out in a nano-second!
Harvey also discusses Romney’s threat to fire Bernanke and what it means to Fed monetary policy prior to the elections, the Republican party’s announcement of the development of a ‘gold commission‘ with the goal of returning the US to a gold standard will be official Republican policy and MUCH MORE.
The Doc’s FULL MUST LISTEN interview with Harvey Organ below:
When asked about this week’s big moves in gold and silver and whether we are witnessing the start of a historic rally in the metals Harvey responded:
No question. The key development that Ned Naylor-Leyland discovered is this big physical purchase of silver that had to be settled INSIDE of the LBMA. They won’t deliver it outside of the system because there is no silver! That’s a real crisis! I’ve always advised the CFTC that the moment London is out of metal, the COMEX will be out in a nano-second! It will travel across the pond as quickly as possible and could cause a default of the COMEX.
This is why you’re seeing massive movements of silver in the vaults, all over the place. Every day there’s been over a million ounces moving around. Whenever you start seeing that, then you know there’s trouble. It’s Peter robbing Paul to pay somebody else. It’s just going on, and on, and on, and it’s now coming home to roost. And our friend the banks – JPM have their hands full!
This is why you’re seeing massive movements of silver in the vaults, all over the place. Every day there’s been over a million ounces moving around. Whenever you start seeing that, then you know there’s trouble. It’s Peter robbing Paul to pay somebody else. It’s just going on, and on, and on, and it’s now coming home to roost. And our friend the banks – JPM have their hands full!
Harvey goes on to discuss the physical shortage developing in the silver market:
Eric Sprott still hasn’t got his silver yet. I can’t remember exactly how much, but he’s still short on his order. He hasn’t completed it yet as of last week. I’m telling you, there’s a TREMENDOUS PHYSICAL SHORTAGE out there, and it’s reflected in the price rising. The price of silver has been closing at it’s highs at the COMEX close which is very positive.
Now I expect a little raid Friday. The bankers are trying to quell the HUGE DEMAND so I expect a raid to try to smash the price down, because the shortfall for Morgan is just annihilating them!
Now I expect a little raid Friday. The bankers are trying to quell the HUGE DEMAND so I expect a raid to try to smash the price down, because the shortfall for Morgan is just annihilating them!
They have problems on their interest rate swaps which are killing them! They have $ Trillions of interest rate swaps and they’re short the 10 year T-bond. That’s been hurting them because of the rate of movement of the yield caught them off guard. They lost on that, they lost on their IG9 London Whale trade, and now the rise in silver. That’s three whammo’s against them, and they’re sweating bullets! It’s certainly reflecting now in the silver and gold price.
Harvey also discusses Romney’s threat to fire Bernanke and what it means to Fed monetary policy prior to the elections, the Republican party’s announcement that a ‘gold commission’ to return the US to a gold standard will be official Republican policy and much more.
Full audio interview below:
Harvey also discussed Ted Butler’s recent claims that the other commercial banks have turned on JP Morgan:
They’re all trying for their survival. Ted Butler calls them the Raptors. The two major guys in silver and gold are HSBC and JP Morgan. They’re the Kingpins. Now the other guys are saying ‘We’ve got to survive ourselves!’. You can just see them going in themselves and purchasing! And you’ll notice that on the COMEX the open interest has been trending different than gold! The OI in gold is near it’s low for 3 years, yet the OI in silver is near it’s record high! This will explain why there’s certain guys in the know who are taking on our boys, the two big guys. It’s very exciting to watch!
The SLV went up for the first time in quite a while today, about a 1.5 million ounces! The GLD has been rising every day. I don’t think it’s real, it’s just paper going in, but that’s a different matter. I’ve always stated that the GLD and SLV are absolute frauds! If you open up their vaults, you’re going to see nothing but paper notes and obligations. The poor shareholders are going to end up with nothing when this thing implodes!
and Eric Sprott still waiting on his silver from July ? ? This is what Harvey was referring to above I believe....
Sprott Physical Silver Trust Announces Exercise of Over-allotment Option by Underwriters in Follow-on Offering of Trust Units
Press Release: Sprott Physical Silver Trust – Thu, Aug 2, 2012 11:41 AM EDT
TORONTO , Aug. 2, 2012 /CNW/ - Sprott Physical Silver Trust (the "Trust") (PSLV) (PHS-U.TO), a trust created to invest and hold substantially all of its assets in physical silver bullion and managed by Sprott Asset Management LP, today announced that the underwriters for the previously announced follow-on public offering (the "Offering") of units ("Units") of the Trust have purchased an additional 1,826,752 Units in connection with the exercise of their over-allotment option.
Including this exercise of the over-allotment option, the gross proceeds of the Offering were approximately US$220,190,610, consisting of 19,926,752 Units offered at US$11.05 per Unit.
The Trust will use the net proceeds of this Offering to acquire physical silver bullion in accordance with the Trust's objective and subject to the Trust's investment and operating restrictions described in the prospectus related to this Offering. The net proceeds of the Offering per Unit are greater than 100% of the most recently calculated net asset value per Unit of the Trust prior to pricing of the Offering, as required under the trust agreement governing the Trust.
The Units are listed on NYSE Arca and the Toronto Stock Exchange under the symbols "PSLV" and "PHS.U", respectively. The Offering was made simultaneously in the United States and Canada by underwriters led by Morgan Stanley and RBC Capital Markets in the United States and RBC Capital Markets and Morgan Stanley in Canada.
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