Gold and silver didn’t even begin to seriously sell off until about fifteen minutes afterthe big dollar index rally was done, so to pin yesterday’s precious metal price action on the currencies is laughable.
One of the other reasons that the sell-offs in the metal are hitting the shares so hard, is that mutual funds are feeling the effects of massive redemptions…and they have to sell whether they want to or not. The markets are very illiquid…and this just makes matters worse.
But the one big question you should be asking yourself is this…”Who is buying all these shares that the precious metals investors are selling in such a panic?” Think about it. Somebody is…and whoever they are [and I have my suspicions] they have infinitely deep pockets…and are the very definition of “strong hands”.
In silver, the Big 4 traders are short 34.1 percent of the entire Comex futures market, once you subtract out all the b.s. market-neutral spread trades. In troy ounces, that 34.1 percent represents 184.4 million ounces…two and a half times the entire Commercial net short position!
And, according to the monthly Bank Participation Report in silver, only three big bullion banks actually matter, so in fact, it’s the Big 3…not the Big 4. They are JPMorgan Chase, Canada’s Bank of Nova Scotia…and HSBC USA. The short position of the 4th largest bank is immaterial.
The ‘5 through 8’ largest traders are short an additional 10.6 percent of the Comex silver market…but at well under 3% each, they just don’t matter in the grand scheme of things.
But, in total, the Big 8 traders are short 45% of the entire Comex silver market…and that’s a minimum number. You can’t make this stuff up.
In gold, the Commercial net short position declined by 357,300 troy ounces during the reporting week…and now sits at 8.41 million ounces.
There are spread trades in gold as well…and the ones that are visible in the Disaggregated COT Report total 75,170 contracts. The total open interest shows as 443,806 contracts…and subtracting out these market-neutral spread trades leaves a true open interest of 368,636 contracts.
In actual fact, dear reader, there are more spread trades than are being shown in this report, but if they showed all spread trades, then the true concentrations of all the market participants would become instantly apparent…and that’s precisely why the report doesn’t show them all. That’s why I say that the true concentrations are actually higher, but it’s impossible to know by how much.
Anyway, the Big 4 are short 8.30 million ounces of gold…virtually 100% of the Commercial net short position of 8.41 million ounces. On a ‘net’ basis, they are short 22.5 percent of the entire Comex gold market. The ‘5 through 8’ traders are short 4.39 million ounces of gold…and that represents an additional 11.9 percentage points of the Comex gold market.
So, the Big 8 are short 151% of the Commercial net short position in gold…and short 34.4% of the entire Comex futures market in gold.
But to show you how much more concentrated the short position is in silver vs. gold…the Big 4 are short 257% of the Commercial net short position in silver. In gold, the Big 4 are short 98.7% of the Commercial net short position. Both figures are outrageous and obscene…and the CME Group does nothing, the CFTC does nothing…and the precious metals mining companies do nothing. As I said a few paragraphs ago…you couldn’t make this stuff up.
Full article: ‘Naive’ to Think Gold Isn’t Manipulated Too, Fund Manager John Butler Says (Proactive Investors)