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Ted Butler

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December 30, 2019 – COT Comments

The holiday-delayed Commitments of Traders (COT) report as of Tuesday, December 24, featured headline changes largely as anticipated, but with a number aspects that seem quite compelling to me. As a reminder, gold and silver prices rose fairly strongly during the reporting week on sharply increased total open interest and decisively penetrated the key 50 day moving average in each. Had there not been a sharp increase in managed money buying and commercial selling, something would be terribly out of order. In COMEX gold futures, the commercials increased their total net short position by 21,700 contracts to 340,400 contracts; less than 5000 contracts from the all-time record of commercial net short position of September 24 (345,100 contracts). As such, the total commercial net short position is about as extremely bearish as it gets in conventional historical terms. Trading activity since the cutoff suggests even more managed money buying and commercial…

December 28, 2019 – Weekly Review

Despite some late price weakness in silver on Friday, gold and silver prices rose fairly sharply in the abbreviated Christmas holiday trading week, with both ending at 8 week closing highs. Gold finished the week up by $34 (2.3%), while silver added 61 cents (3.5%). As a result of silver’s relative outperformance, the silver/gold price ratio tightened by a full point to 85 to 1 (still sky-high and reflective of silver’s gross undervaluation). Both gold and silver decisively penetrated their respective 50 day moving averages to the upside this week, after trading below the same averages for nearly two and a half months. Total open interest in COMEX gold and silver futures rose strongly both into the Tuesday cutoff for the reporting week and after, suggesting aggressive additional managed money buying and commercial selling. As a reminder, I’ll have comments on Monday’s delayed Commitments of Traders (COT) report late that…

December 21, 2019 – Weekly Review

While gold and silver prices closed at six week highs, a key feature has been just how tight the recent trading range has been. Gold ended the week one dollar higher, while silver added 22 cents (1.3%), resulting in the silver/gold price ratio tightening in by a full point to 86 to 1. (No matter how long silver has been this cheap relative to gold, it’s something I still marvel at). And it’s not just that the trading range has been so tight for the past six weeks, what’s more remarkable is that almost all of the trading has occurred at prices just slightly below the key 50 day moving averages in both gold and silver. On Thursday, gold prices closed slightly above its 50 day moving average for the first time in nearly two months, before closing slightly below (actually at) the moving average yesterday; while silver briefly traded…

December 18, 2019 – Open Questions About to be Answered

There are two main questions remaining open regarding gold and silver that are likely to be answered in the relative near future. The first is the resolution of the Justice Department’s criminal investigation, including guilty pleas by and indictments of traders from JPMorgan, into precious metal manipulation on the Commodity Exchange, Inc. (COMEX). The second question is the pending resolution of the unprecedented still-unresolved lopsided market structure on the COMEX between the managed money traders on the long side and the eight largest commercial shorts. Dealing first with the DOJ’s case against traders, both former and current, from JPMorgan, much time has passed since the first guilty plea was reached in October 2018. By comparison, less than a year had passed before BankAmerica/Merrill Lynch entered into a non-prosecution agreement with the DOJ as a result of two of its former precious metals traders having been indicted for spoofing and price…

December 14, 2019 – Weekly Review

Gold and silver prices rallied this week, with gold ending $15 (1%) higher and at its highest weekly close in 6 weeks, while silver tacked on 40 cents (2.4%), snapping back from the prior week’s lowest close in 4 months. Due to silver’s relative outperformance, the silver/gold price ratio tightened in by a full point to 87 to 1, which still leaves silver more undervalued compared to gold than words can describe – free market words, anyway. Yesterday’s Commitments of Traders (COT) report came in almost exactly as expected, thus confirming not only the expected changes for the reporting week ended Tuesday, but also what have been unprecedented changes (or lack thereof) for the past few months. What makes yesterday’s report so promising is that after last week’s dismal price performance, particularly in silver, there was absolutely no price follow through to the downside and silver closed higher every day…

December 11, 2019 – Occam’s Razor

If there is one question that I’ve been asked more often than any other for many years (decades actually), it is why do the managed money traders persist in the apparent folly of falling for the dirty tricks and price prompts from the commercials in their COMEX gold and silver dealings? After all, there can be little question that the managed money technical funds, with their rigid approach of buying as prices rise and penetrate the key moving averages and selling when prices decline, are very much the enablers of the ongoing silver and gold price manipulation. Not the perpetrators, mind you, but surely the enablers. Without the mechanical buying and selling of the managed money technical funds, the commercials (banks, led by JPMorgan) would not have held the death grip on price they’ve held over the past 35 years or longer. And without the technical funds behaving so predictably…