Loading ...Who Is Buying Silver
Who Is Buying Silver: The Comex September Shorts
The rise in silver prices from $16.41 on 31 July to $18.475 at one point this morning (basis the September Comex silver futures contract) has been due to short covering in the September Comex silver futures contract, and not investment demand.
Investment demand has been very low during this time, as the table here shows. Meanwhile, there has been a tremen- dous amount of silver short positions bought back on the NY Comex — 558.4 million ounces, or 558 times more that U.S. Silver Eagle sales during this time.
The shorts are rolling out of their September positions into December positions. This is what is pushing prices higher.
There are still 226.5 million ounces of September open interest to be rolled forward, and two trading days before the September contract becomes deliverable. So, the upward pressure on silver prices should last another two days.
Then, the silver price should be expected to fall dramatically once the September roll is over.
The same dynamics were at work in April 2011, when silver went from $37 at the start of April to $49.19 at the end of the month. Silver marketing groups became wildly bullish. CPM issued a sell recommendation at $49, saying the in- crease was entirely due to short covering in the May Comex contract, with very low purchases of silver coins and inves- tor sales of ETFs. Prices plunged to around $32 within the first week of April to $33.04 by that Friday, once the roll out of April shorts was over.
It’s April 2011 all over again.
Who Is Buying Silver: The Comex September Shorts
Net Buying in August To Date
Sept Open Interest 558,395,000
Comex 31 July 27 Aug
784,885,000 226,490,000
SLV 28,725,480
31 July 27 Aug
356,715,500 385,440,980
US Silver Eagle sales August to date 1,007,000
A few additional points should be made.
1. Where did these enormous short positions come from? They were built up starting in 2015 and 2016 as investors stopped buying so much silver and started selling silver. With the silver market thus ‘well supplied’ (meaning, oversup- plied), much of this metal wound up being bought by market makers who could not find ready buyers of physical metal. As a result the market makers wound up owning and holding the physical silver… and hedging their long physical posi- tions with Comex futures and options. That is what market makers do.
Copyright CPM Group 2019.
Interesting. I’m going to mull this over.
jskauai
where did you get this report ?
It says this is a subscription costing $3800 .
It may not be appropriate to share it here.
It certainly seems strange to say the least.
I always though that when shorts are rolled over there is NO net effect on the price.
Thought about it. Disagree. I’ll be relying on traditional chartology though. I believe silver has a good deal more upside from here, regardless of the shorts shorting more or less. Yes, it will no doubt cause price oscillations, but as part of an ongoing upward trend. If the GSR breaks down, I don’t see how silver is going to avoid seeing some very large gains.
I just received confirmation that this post was sent to JSKauai via email
he has a free subscription for their emails..so this is a legit public offering
Thanks JSKauai