COMEX Swap Dealers Remain Hugely Short Silver Futures

HOUSTON –  Looking at the legacy COT report for silver futures, and tracking the traders the CFTC calls “commercial” – including the Producer/Merchants and Swap Dealers combined into a single category (with a total of 45 traders reporting commercial long contracts and 54 reporting commercial shorts) – we can see in the data table below that on July 8 silver closed at $21.02.  On July 15 the silver LCNS (large commercial net short position) peaked at 58,696 contracts net short. 

Since then silver has declined a net $1.12 or 5.3% (from $21.02 to $19.90 as measured on Tuesdays) while the commercials have covered or offset 14,970 lots or 25.5% of their collective LCNS. 

Silver -5.3%,

LCNS -25.5%,

4 reporting weeks. 

Data table LCNS Silver, combined commercials positioning.

Here’s what it looks like in our more familiar graph form. 

That’s a modestly accelerated pace of LCNS reduction.

What about the mercenary banks that the CFTC labels “Swap Dealers” (SDs) net and gross short positions?  You know, the gang of traders we have identified as having an unusually large gross short position on both gold and silver, but especially on silver…   

Well, look at the graph for the SD net position from the Disaggregated Commitments of Traders or DCOT report:  (SDs report 15,910 contracts net short, but that’s down quite a bit from July 8 when it was 25,245 contracts net short.   Here’s the graph for the NET position (longs minus shorts).   

SD Net Position Silver Futures (Swap Dealers still showing a significant net short position for silver futures). 

And how about just their gross shorts on silver?  Here’s the graph and the numbers. 

SD Gross Shorts Silver Futures  (Still Extreme.)

As anyone can see, the SDs remain overly short silver futures.  As of August 12 the SDs reported holding 48,978 contracts short silver (the equivalent of about 245 million ounces).  That’s a lot (and still a bunch of short covering horsepower) but it’s actually down from 58,381 contracts July 8 with silver then with a $21 handle.   

Remember up above we talked about 54 “commercial traders” reporting shorts in the Legacy COT report?  Only 15 traders of that 54 are classed as Swap Dealers and those 15 mercenary bank entities are collectively short 245 million ounces of silver metal. 

Now, we’re virtually certain that they do not now own and never will control that much silver metal.  $4.8 billion worth of silver from 15 high-rolling, short-selling prop-trading bankers, probably hedging the other side of a trade, but for who we cannot know or guess and using what vehicle is also an unknown to us outside observers. 

All we know is that the Swap Dealers found reasons to report holding a record high number of short silver futures contracts and it’s something we have never seen before (from the Swap Dealers, … remember it was the Producer/Merchants that were so bloody short silver in 2010 and 2011 in the last squeeze … then, as we have discussed many times in these pages,  more than 62,000 contracts!  … More than 310 million ounces.).   

Anyway, today it’s $4.8 billion worth at $19.55 silver held by only 15 entities.  Is that about $319 million each, divided equally?  Again, we have to wonder what their collective “pucker factor” is with that many contracts that absolutely have to be bought back at some point with only the price as an unknown…

We end here for the evening. 

More to come by Sunday evening in a Update that will post here.