"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Sunday, September 16, 2012

Hedge Fund Silver Positions

Here is the latest breakdown of the hedge fund positions in the Silver market at the Comex based on Friday's COT data.

Speculative money flows continue into Silver as hedge fund managers position themselves further on the long side of the market and continue reducing their short side exposure.


  1. I hope there'll be time for a break at the 35$ level. This will start to go too high too fast if we get through 35.50 immediately. A bit of a correction would be most welcome to drive the prices higher this autumn. Besides, a pause at 35 $ validates a range, which, when broken, would give a target of 35.50-26 + 35.50 = around 45 $ :)
    Gold has stopped exactly on the top of the flag I mentionned once before. Here again, I'd like to see it pause for a few days and correct a bit, to find a support nearby and then break the recent highs. Potential of the flag...2700 + once we break 1790 :)
    Maybe I'm a dreamer...but I'm not the only one :)

  2. Dan, is that CoT data from futures or combined futures and options? If you could provides some insight into the value of using one or the other it would be appreciated.

  3. Interesting. I used some of the same data to plot the % of short contracts held by hedge funds and compared to the spot price. This seems to show that hedge funds piling on longs would be reason to sell... Thoughts?


  4. Dear Dan,
    Here is the graph of the flag I4m following.
    Kind regards and thanks for the updates.

  5. Aaron;

    I used the combined futures and option data as it gives a bit better view of how the major players are positioned. Sometimes, the plain futures can be a bit misleading in the sense that guys may have hedged futures longs or shorts by the use of options with the result that they may not be quite as bullish or bearish as the plain futures positions would otherwise indicate.

    Hedge fund money is what drives markets - if they are buying, one does not normally want to go against their money flow unless you have very deep pockets and can withstand a fair amount of financial pain in your commodity trading account while waiting for them to finally reverse. Eventually they will book profits and close out some positions. Gauging when they will do that is always tricky however.

    There is an old saying - that the trend is your friend. FAding a trend is very dangerous for all but the most experienced and fleet of foot traders.

  6. Thanks for taking the time to reply, Dan.

  7. Any chance on getting a price overlay to make things easier to evaluate?

  8. Mr. Palamedes, I have a chart that does something similar to what you are looking for. In and of itself, I'd say we be looking for lower prices in the near future. I would love to hear Dan's insight.


  9. Mr. Palamedes;

    Hedge fund money is the driver of our modern markets. When they are buying, prices will rise. When they are selling, prices will fall. It is that simple.

    Currently hedge funds are buying in silver, both covering previous short positions and adding to existing longs. You can take my chart of the COT hedge fund positions and use it in conjunction with a silver price chart and you will note that since the short covering (buying) of the hedge funds began and the number of their short positions began decreasing, the price of silver has risen. YOu will also note on that chart, that since they have been buying by adding new longs, the price has risen.

    That is the reason silver is currently in an uptrend and dips in price are being bought.

  10. Dan,

    Is the data used to generate this chart available in tabular form on the web? I would like to run some charts with it using various technical indicators.



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