by Craig Hemke, Sprott Money:
This article sheds light on the potential direction of gold and silver prices. We discussed last week the current positioning of traders in the COMEX precious metals. However, the situation has improved even more in the days since and, because we’re all interested in saving a few dollars and buying low, I figured that it was a good idea to provide this update.
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Unveiling the COMEX Silver Market Landscape
First of all, if you missed last week’s silver price analysis, you should probably start by giving it a look over. There’s a lot of raw data to suggest that the silver price lows for this current cycle are near, and this article provides some history and a recap: The Next Silver Price Short Squeeze.
Key Silver Price Insights From Historical Data
In short, if the bullion bank trading desks are able to manage and manipulate price, then having knowledge of their positioning should give you an advantage in understanding which direction price is likely to head next. At present, the bank desks are getting long (expecting price to rise) against a growing short position of the hedge funds. This happened several times in late 2022, and each instance preceded a sharp silver price rally. It’s happening again now.
Recent Developments in the Silver Market
In the week since the previous post was written, the COMEX positioning has “improved” yet again. The latest Commitment of Traders survey was taken at the COMEX close on Tuesday, August 15, and it was reported on Friday, August 18. What did it reveal? See below:
As you can see, during that most recent reporting week and as price fell by 16¢, the swap dealers (bullion bank desks) added 741 new long positions while covering and closing 4,738 of their shorts. This was to counter the opposite move by the hedge funds, which sold 275 longs while adding 2,614 new shorts.
By subtracting the gross short number from the gross long number, we come up with a NET LONG figure of 5,978 contracts for the banks. The same calculation yields a NET SHORT position of 6,670 contracts for the hedge funds. While these levels are not yet at the extreme levels seen on multiple occasions in late 2022, they’re certainly getting close.
Silver Price: A Pattern That Echoes Past Trends
Below is the Commitment of Traders report taken on Tuesday, February 28, 2023. Compare this to the table posted above from the report last week.
Next, let’s identify February 28, 2023 on a COMEX silver price chart and check to see what happened in the days and weeks that followed…
