Das dramatische Schrumpfen der tech funds in den letzten Monaten hatte offensichtlich zur Folge, dass sich die Trading Patterns an der COMEX verändert haben. Die beweglicheren small dealer melken nun – neben den noch verbliebenen tech funds – die wenigen big dealer ab, mit denen sie früher noch gemeinsame Sache gemacht hatten. Die big dealer kommen bei Abverkäufen nicht mehr aus ihren Shortpositionen heraus und müssen diese Zug um Zug erhöhen. Sie sitzen in der Falle, denn irgendwann wird der Moment kommen, in dem sie zu steigenden Kursen (anstatt wie früher zu fallenden) covern müssen. Die Explosion des POS scheint nun endgültig vorprogrammiert, allein der Zeitpunkt ist noch offen.
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As long as the tech funds’ assets were growing (due mainly to infusions of investor capital), they provided ample food supply to both the T. Rex’s and the raptors. The tech funds’ positions were large enough for the dealers to divvy up. All was well with the carnivores. But when the tech funds’ assets began to shrink dramatically, the food supply to the dealers was reduced, causing a change in the distribution pattern. In essence, the smaller and quicker raptors (the smaller commercials) snatched food from the much bigger T-Rex’s. Competition came to the dealer dinosaur world.
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The net effect of this new trading pattern, which is documented in the COT report, is that the biggest commercial shorts have become almost frozen in place, as the raptors steal their prey. As a result, the concentrated short position of the big 4 commercial shorts has grown to record levels this year. Even with the recent sell-off in silver, the concentrated short position of the big 4 remains stubbornly high (well above previous levels after sell-offs), while the raptors have built up a record net long position.
In the past two and a half months (the COT as of 2/27 to the most recent), the raptors have been able to turn a net short position of 7500 contracts into a net long position of 10,500 contracts, or a net swing of 18,000 contracts (90 million ounces.) The big 4 have only been able to reduce their net short position by 6000 contracts, leaving them still short over 46,000 contracts (230 million ounces). It’s as if the T. Rex’s are sinking in quicksand, while the raptors steal their prey.
To be sure, you don’t want to underestimate a cornered rat, or especially a cornered T-rex. The big shorts may be capable of causing violent price behavior. But make no mistake; any sharp move to the downside at this point should be brief. The big shorts’ days appear numbered. If so, the potential effect upon the price of silver could be stunning. More and more, the giant short traders are becoming isolated and cut off from their food supply. That’s why the concentrated short position held by them - remains so high. But, because the raptors are taking the other side of the trade, and not the tech funds, the T. Rex’s are trapped.
If my interpretation is close to being correct, the emergence of the raptors could portend profound changes in the dynamics of the silver market. (By the way, this same pattern is also clear in COMEX gold, it’s just that it’s way more severe in silver). Up until now, the raptors have been content to sell and take profits on rallies, and then go short, as the diminished tech funds get long. That pattern may continue, as long as the raptors are content with relatively small profits. If that’s the case, we still get decent and tradable rallies from relatively low risk buy points, like now.
But I get the sense that these raptors may not realize their true power and how much trouble the T. Rex’s are in. If they do come to realize that they are in the driver’s seat, they could press the T. Rex’s toward extinction, maybe even forcing them to attempt to buy back shorts on the upside, something that has never occurred). Other outsiders (hedge funds) could pick up the scent and we could have the true conflagration to the upside, the big one.
Remember, the real supply/demand fundamentals for silver have never been better. The only thing that has kept the price capped is the big concentrated short position of the T. Rex’s. The only thing that can keep the price capped temporarily is an increase in that already obscenely large short position. If that occurs, I expect it will receive widespread attention. While I expect the comatose regulators to do nothing, I think it will not go unnoticed in the market by other participants who may detect and test T. Rex vulnerability. Then it’s, Katie bar the door.
The recent move below the 200-day moving average in silver suggests maximum liquidation of the remaining tech fund longs. This has always signaled low risk buy points in the past, and should once again. The raptors have and are building a record long position. I think you should do so as well.
http://www.investmentrarities.com/05-22-07.html
Gruß, Sil
