Silverseekers' Corner

[Peter89]

A Big New Development​

February 01, 2024
Ted Butler

Over the past five reporting weeks the number of long traders in the Other Large Reporting Traders category has increased by 29 traders, from 49 to 78 traders – which I believe is both the largest increase and largest number of long traders in this category ever.

I must emphasize that the increase in new reporting traders came on a fairly significant and consistent decline in the price of silver of more than two dollars, which strongly suggests that these traders were not increasing their already substantial long positions on the flakey moving average penetrations that motivate the braindead managed money technical funds. The “new” longs obviously perceived value in extremely undervalued silver prices.

One question the recent unusual futures contract long positioning answers is the perennially question of why doesn’t someone step up and buy silver in decent quantities? And buying COMEX futures contracts would be the preferred method if one chose to buy silver on a leveraged-basis (not something I ever recommended) and in the form least disruptive to price. Stated differently, I don’t think that 30 million oz of physical silver could be purchased outright or through the purchase of shares of silver ETFs over five weeks with prices falling by $2. Real physical silver? No. Paper silver on the COMEX? Yes.

I can’t help but believe that the notable increase in buying by the new reporting traders is largely a reaction to the remarkably-bullish developments in the physical silver market and the increasingly obvious deepening physical shortage.


One of the most encouraging signs about the big increase in the number of new long traders and the overall increase of 6000 long contracts in the Other Large Reporting Trader category, is that it wasn’t the collusive and crooked COMEX commercial traders which sold to them. Over the course of the past five reporting weeks the total commercial net short position fell by 14,700 contracts, from 48,800 contracts to 34,100 contracts.

So, even though it appears to be good news that so many traders previously classified as non-reporting traders stepped up to add to their existing long positions enough to push them into large reporting trader status; it’s even better news that the crooked and collusive COMEX commercials weren’t the counterparties selling.
As to who were the sellers, the data make it clear it was primarily the braindead managed money traders, who sold more than 17,500 net contracts over the five reporting weeks in question. This is a profoundly-bullish combination.

A Big New Development

On the discovery of the sharp increase of 60% in the number of new long traders (29) and the total gross longs of 30 million oz. of silver over the past five reporting weeks: such an occurrence most likely involves collusion.

silverseek.com

 

[Ttazzman]

i tend to struggle with these trading report interpretations as ...there are always 2 sides to the trades.....so basicly i feel like i am guessing which side is smarter ......

i do think volume and size of trades could be a indicator ....for example a lot of small trades to form a long position vs one huge trade to knock down the price ...

i do see the lower stocks of physical as a potential bullish indicator

having read Teds articles for years i respect he has a opinion but rarely does it play out in the market and over time it seems his statements are getting less definitive

just how i look at the comex i am always open to being educated

 

[Peter89]

so basically i feel like i am guessing which side is smarter ......

No need to guess TM, the swap dealers are the smarter side

Swap dealers are traditionally short. Like the producers, but they are not producers, they are financial institutions.

Comex, Silver, Disaggregated COT report, 3 years
Above silver price, below swap dealers position

In the last 3 years Swap dealers were never wrong.
100% betting success.
Their positioning is by far a much better indicator than any technical indicator.
When their net position enters the positive field it's time to start accumulating your calls or whatever vehicle traders use to go long.

After every swap dealers' buying cycle, silver goes up.
Sometimes it goes up for a couple of weeks, sometimes for a couple of months.
Sometimes it goes up a lot, sometimes less.
But it will go up.

When I drew the blue lines I started at the bottom, laying the line where their buying seasons end. I didn't know where was I going to land on the silver chart pulling that blue line up.
I do it with the first line... boom! inflection point, new uptrend starts.
I do it with the second line... boom! inflection point, new uptrend starts.
I do it with the third one... boom!
I was like...

So where are we now.
The last cot data refers to one week ago, Tuesday 31.
At that time the swap dealers net position was basically neutral.
Since then silver sank from 23,1 to 22,3.
If they have taken the other side of the idiots - the Money managers algorithms - their net position should have entered into positive field.
Their biggest net long position was ca 20k contracts - Sept 22.
When will they end their buying cycle. Who knows. Maybe Ted Butler could put up some useful speculation about it.
But I think for traders looking for signals, this should be accumulation time.
Just my opinion. No financial advice

 

[Peter89]

so, last week Cot report
Swap Dealers net short -1.700
Money Managers net long + 4.300

The cot report coming out today, if I'm smart it's inversion: Swap Dealers net long, MM net short

 

[CopperSilverGold]

Another silver shortage? I feel like I have heard that before somewhere...

 

[JayDubya]

But this time it's different

 

[Peter89]

Hello refugees
net short means a group of traders in a futures market is overall a seller,
doesn't mean there is a shortage

 

[pmbug]

Rumor has it he SGE is closed for a week or so for Chinese holiday so COMEX won't have a counterbalance...

 

[Peter89]

so, last week Cot report
Swap Dealers net short -1.700
Money Managers net long + 4.300

The cot report coming out today, if I'm smart it's inversion: Swap Dealers net long, MM net short

Swap Dealers - 820
MM - 4.600

Half smart

 

[Peter89]

Rumor has it he SGE is closed for a week or so for Chinese holiday so COMEX won't have a counterbalance...

Rumor is right Shanghai comes back on the 18th
If I'm smart they will exploit it: next week silver down, Swap Dealers pile on longs,
next COT report: Swap Dealer net long, MM doubling down on shorts.
Then it can turn up for good

 

[Peter89]

Confirmation about the upcoming silver drop coming from Rafi Faber on Arcadia Economics (timeframe min. 6-9): Open Interest high, in the past always followed by price drops.

 

[pmbug]

I'm looking to buy a little bit of silver in the next few days, so this is good news for me if he is right.

 

[BeefJerky]

If you read Ted Butler articles over the years you'd realize these COT reports are actually pretty meaningless to the price of silver.

 

[Peter89]

If you read Ted Butler articles over the years you'd realize these COT reports are actually pretty meaningless to the price of silver.

COT reports... Ted Butler... physical imbalances... Shanghai... technical signals... experts and gurus... each one per se can be considered meaningless but when they all align, and you are some clueless Peter with no knowledge about when und where... they can help

 

[Peter89]

If I'm smart they will exploit it: next week silver down, Swap Dealers pile on longs,
next COT report: Swap Dealer net long, MM doubling down on shorts.
Then it can turn up for good

Silver down to 22
Money Managers selling,
Swap Dealers accumulating long contracts,
everything according to plan

 

[nickndfl]

I like kilo & 10 oz bars best. I saw them as low as spot + $0.79 this week.

 

[Peter89]

Three Things That Are Killing Silver​

Over the years (and decades) silver travels a path fraught with excitement and disappointment. Both the excitement and the disappointment stem from three things that are killing silver - unrealistic expectations, inflation, and time.

UNREALISTIC EXPECTATIONS
The unusual conditions leading to the explosion in the silver price in the late 1970s are unlikely to happen again in a similar context...

"There are two primary reasons for silver's price surge in the 1970s.

1) Silver mining production lagged consumption for nearly two full decades during the 1950s-60s. During that period, the U.S. Treasury sold silver regularly from its hoard of nearly two billion ounces. This action kept the market price for silver suppressed. By 1970 nearly all of the silver was gone and the Treasury had to stop its sales. Thus, the price of silver was freed to find a presumably higher level that would eventually balance consumption and production.


2) The United States suspended all convertibility of the U.S. dollar into gold in 1971. Those who were prescient enough to recognize the ongoing threat of further U.S. dollar depreciation, purchased gold and silver based on their historic roles as money.

The Hunt family's involvement simply added to these two forces and likely sent silver prices far beyond any reasonably sustainable level at the time. From an average price of $1.60 to a high of $49.50 in January 1980 represents a three thousand percent increase."

INFLATION
The second factor that is killing silver is inflation. No matter how often or how extensively people argue that silver is a hedge against inflation, the facts say differently. Since its peak in 1980 silver has not matched the effects of inflation, let alone produced any real profits.

TIME
It is said that "time waits for no one." With silver bulls, time doesn't seem to matter at all. The longer it takes, the higher the price will rise; or, so they say. Meanwhile, the effects of inflation eat away at silver's value and widen the distance between silver's current price and what were already unrealistic expectations for its price targets.

Three Things That Are Killing Silver

The current silver price is less than half its 1980 peak price in nominal terms alone ($22.80 currently vs. $48.50 1980).

silverseek.com

Instead this is my take
Two things that are killing silver: Comex' futures market and London's unallocated market...