¤ The WrapMany assert that the giant concentrated short position is just a hedge. The eight largest shorts on the COMEX hold 320 million oz of silver futures net short, or an average of 40 million oz each. [JPMorgan's short position is almost a third of that amount at 100 million ounces. - Ed] The eight largest silver miners in the world produced 255 million oz of silver in 2013 and little change is projected for 2014. I don’t think any of that production or future production is hedged. So if the world’s largest silver miners haven’t hedged their production, what is the legitimate economic explanation for the concentrated COMEX short position?
The concentrated short position is a matter of public record and the mining company data are in the just-released Silver Institute annual review (by GFMS), as well as the recent release on silver by CPM Group, yet neither report made any connection. Let me state the obvious – in having sold more than what the eight largest miners produced, the eight largest COMEX shorts exerted more influence on price than did the miners with their real production. But since the short selling was in no way related to legitimate miner hedging, the price influence becomes illegitimate. COT data indicate a concentrated short position of 320 million oz is held by 8 traders and the annual silver reviews indicate the miners aren’t hedging. So what’s behind the giant COMEX short position? - Silver analyst Ted Butler: 17 May 2014 As far as I could tell, Wednesday was just another day of quiet price management in all four precious metals---and I have no idea of the meaning of vicious down/up spike in the gold price that occurred at precisely 2 p.m. EDT. We're still coasting along just under the 50-day moving average in gold---and the 20-day moving average in silver. Here are the graphs from stockcharts.com showing yesterday's trading data in both metals. As I write this paragraph, London has been open just under 10 minutes. Gold is up a few dollars---and silver is up less than a dime, but spiked higher by more than 20 cents right at the open. Both platinum and palladium are up a buck each. Volumes in both metals were microscopic during most of Far East trading, but have picked up a hair since the open, but are still very much on the lighter side. The dollar index isn't doing a thing. I haven't much to add to today's column. I'm just sitting here my belly-button lint brush waiting for the precious metal markets to hatch into something---and that will happen when it's allowed to happen---and the return of India as a buying force [of an amount yet to be determined] will certainly change the dynamics in the gold market to as yet-unknown extent. But, as the last paragraph in the Zero Hedge story on this issue posted in the Critical Reads section so succinctly put it, it depends on what the powers that be decide. How much more Comex paper will they throw at these markets until they toss in the towel and attempt to control prices from much higher price levels? Then the question begs to be asked as to what will become of the Big 4 and 8 short holders in both silver and gold---and the other two precious metals as well. Some entities are going to have to burn in hell on that rally, if that turns out to be the action plan. This is all speculation on my part, of course, but something has to give at some point. The fact that Russia bought 28 tonnes of gold in April will not be lost on "da boyz"---and if these purchases extend into the future, the physical drain should have an impact sooner or later, especially if you throw a resurgent India into the mix as well. And as probable as this scenario may be, the situation in silver is most likely beyond critical, as the turnover at the Comex-approved depositories indicates that all is not well in that physical silver market, either. The strikes in South Africa still show no signs of letting up---and one wonders what how much is left in the physical markets in both platinum and palladium as well. If there is inventory on Planet Earth, it's a well-guarded secret, as there's certainly not much sitting in the Comex warehouses. So, we wait. And as I hit the send button on today's column at 5 a.m. EDT, not much has changed now that London has been trading a couple of hours. The tiny rally in gold didn't amount to much---and the rather enthusiastic rally in silver got dealt with in the usual manner. Volumes in both gold and silver have picked up quite a bit, but still not what I would call overly heavy. Platinum and palladium are still trading around the unchanged mark---and the dollar index is up a handful of basis points. That's it for today---and I'll see here tomorrow.