Hi GaS folks.
You may be interested to discover that the recent Commitment of Traders report released yesterday shows the commercials ( a.k.a the "smart money" ) have the most bullish set up ever seen in the history of the report.
For those who are not familiar with the lingo of the report. The commercials are the big market players. Their positions have the biggest influence on overall price movement because they have the ability to place massive numbers of contracts.
At the bottom of price movements - before the price starts to move up again - the commercials generally have LOW SHORT positions, HIGH LONG positions , or a combination of both. Their position is called the COMMERCIAL NET SHORT POSITION. It is called the net short position because they ALWAYS have more short positions than long positions .... until now.
Yes in silver , for the first time in history , the commercials are NET LONG. They have BOTH record low short positions AND record high long
What does this mean for us? Well why would someone choose to have lots of long positions and not many short positions? Perhaps someone who anticipates price to go up? Historically the commercials always win. So either the commercials are setting up to be wrong for the first time ever or price is going to go up and they will make massive profits. Probability favours the latter so it makes sense to mimic the commercial position in such situations
It is an opportune time to keep a vigilant eye on the charts. Be aware that one characteristic of the commercials is they like to make their move when it is LEAST EXPECTED. The unusual bullish extreme of this Commitment of Traders report won't go unnoticed in the trading world. It may entice traders to place big long orders in anticipation of an inevitable price reversal which is a perfect time for commercials to initiate a smash down of price to even lower extremes.
Below is a chart showing the silver commercial net short positions since 2009. At the far right of the graph there is a little dot that represents their position has dropped below the zero line (ie net long) for the first time.
Exciting and potentially profitable times ahead. I look forward to hearing how people position themselves over the coming days and weeks.
Interesting! Thanks Nathan.
Also interesting...the checklist scored 100 percent probability of a HP long for gold. The checklist has not been proved wrong yet, but theres always a first time...
I am not in gold yet because of other factors, but I'm keeping a close watch on both PMs.
UPDATE: Latest CoT report shows the commercials are now net long in BOTH silver and gold. And the speculators are net short in both as well.
