Best of the Week
Most Popular
1. Crude Oil Price Trend Forecast - Saudi's Want $100 for ARAMCO Stock IPO - Nadeem_Walayat
2.Gold Price Focusing on May Cycle Bottom - Jim_Curry
3.Silver, silver, and silver! There’s More Than Silver, People! - P_Radomski_CFA
4.Is the Malaysian Economy a Potemkin Village - Sam_Chee_Kong
5.Stock Market Study Shows Why You Shouldn’t “Sell in May and Go Away” - Troy_Bombardia
6.A Big Stock Market Shock is About to Start - Martin C
7.A Long Term Gold Very Unpopular View - Rambus_Chartology
8.Stock Market “Sell in May and go away” Study When Stocks Are Down YTD - Troy_Bombardia
9.Global Currency RESET Challenge: Ultimate Twist - Jim_Willie_CB
10.The Coming Silver Supply Crunch Is Worse Than You Know - Jeff Clark
Last 7 days
Blackstone, BlackRock or a Public Bank for California’s Money? - 27th May 18
Stock Market Study: How Long After a 10%+ “Small Correction” to Make New Highs? - 27th May 18
Gold, US Stocks and Bonds - 26th May 18
Climate Change Canaries and Our Changing Climate - 26th May 18
Gold Junior Stocks GDXJ ETF Fundamentals - 26th May 18
What to Expect at a Critical Stock Market Point: End of a Wave 2 Rally - 25th May 18
Merlin Passes Top Tips for Buying and Using Premium vs Standard, Theme Parks UK - 25th May 18
Trump “Victories” on Trade are Anything But - 25th May 18
Crude Oil: It’s Here! - 25th May 18
Stock Market Distribution Pattern Revealed - 25th May 18
Stock Market Topping - Everything Looks Rosy at the End of a Trend! - 25th May 18
Trump Puts North Korea Nuclear WAR Back on Track as Plans for Nobel Peace Prize Evaporate - 25th May 18
Insane EU GDPR SCAM Triggers Mass Email Spam Attacks! - 24th May 18
Stock Market Higher Again, but Still No Breakout - 24th May 18
Study: Slowing Global Economic Growth IS NOT Bearish for U.S. Stocks - 24th May 18
What if This Week’s Rally in Gold is Already Over? - 24th May 18
EUR/USD – Reward for Bears - 24th May 18
5 Terrible Trading Mistakes That Rookie Investors Keep Making - 24th May 18
More Clarity for the Short Term for Bitcoin Price - 22nd May 18
Study: A Rising and Strong U.S. Dollar Isn’t Consistently Bearish for the Stock Market - 22nd May 18
Gold, Silver & US Dollar Updates with Review of Latest COTS - 22nd May 18
Upside DOW Stock Market Breakout May Be Just the Beginning - 22nd May 18
5 Reasons Why Forex Trading Is Becoming Such A Big Deal In SA - 22nd May 18
Fibonacci And Elliot Wave Predict Stock Market Breakout Highs - 21st May 18
Stock Market Ideal Cycle Low Near - 21st May 18
5 Effects Of Currency Fluctuations On The Economy - 21st May 18
Financial Conditions are Still too Easy for the Stocks Bull Market to End - 21st May 18
US Stock Market Elliott Wave Predictions for 2018 and Beyond - 20th May 18
Are You Still Fearful of Cryptos? - 20th May 18
US Stocks - Why I am Short-term Bearish, Medium-term Bullish - 20th May 18
Looking for a Turn in Gold Price - 20th May 18
GDX Gold Mining Stock Fundamentals 2018 - 19th May 18
Semiconductor Stock Market Canaries: Chirp, Warble… Soon a Croak and Silence? - 19th May 18
Three Drivers of Gold Price - 18th May 18
Gold Market in First Tertile of 2018 - 18th May 18

Market Oracle FREE Newsletter

Trading Lessons

Silver Price and COT Data

Commodities / Gold and Silver 2013 Apr 25, 2013 - 04:42 PM GMT

By: DeviantInvestor

Commodities

The Commitment of Traders data is published every Friday. It lists the reportable positions of the commercial and non-commercial traders for silver contracts on the COMEX.

STOP! Yes, I know
•The data is manipulated. The same people who brought us LIBOR, flash crashes, high frequency trading, and the most recent gold and silver crash are the people who report the data.


•Experienced traders like Jim Sinclair understand the inner workings of this data far better than I, and it is my impression that he is skeptical of the value of the COT data.

•The data is subject to revision, errors, and occasional changes in definitions.

•Not everyone in the world is honest in their reporting (really?), and the regulation and enforcement might be a bit lax (really?).
But, given the above, let’s look at the data and USE WHAT WE HAVE.

•First: Take the non-commercial category and net the longs and shorts. Call this the non-commercial net longs.

•Second: Take the commercial category and net the longs and shorts (longs minus shorts – may be negative). Call this the commercial net longs.

•Third: Subtract the commercial net longs from the non-commercial net longs. This provides a rough estimate of the difference in commitment to silver between those two broad groups of traders on the COMEX. So what? Is it valuable? Does it tell us anything useful about probable future price changes?

Examine the graph. The COT non-commercial net longs less the commercial net longs (in the legend as “net long”) are shown in red. Pay attention to the red circles where the “net long” drops below 50,000.


The price of silver (in dollars) since 2005 is shown. Note the black circles that roughly correspond to the red circles. Each red circle (low in “net long”) was a buying opportunity, and silver subsequently rose in price. Some were excellent long-term opportunities, such as September 2005, August 2007, October 2008, and April 2009. Others, such as July 2011, October 2011, December 2011, and June 2012, were good but short-lived buying opportunities.

Conclusions
In spite of the supposed manipulation and distortion in the data, it does have some value indicating future price direction.

The data is better at picking price bottoms than tops. Do NOT trade using this data alone. NOW looks like a price bottom.

The data will probably NOT tell you if the current “bottom” is one in a series of lower lows in a bear market or if it is a multi-year bottom and the beginning of a new bull market.

My Opinion
This current bottom is more like the bottom in 2008 after that 55% washout than any other bottom in the past three decades. I expect that now is a significant bottom, and we will see substantially higher prices over the next several months and several years. Unfortunately, I also expected the same after the June 2012 bottom. So, we’ll wait and see… In the meantime, go back and review the fundamental case for silver and gold.

Read: Why Buy Silver? and Why Buy Gold?

GE Christenson
aka Deviant Investor

If you would like to be updated on new blog posts, please subscribe to my RSS Feed or e-mail

© 2013 Copyright Deviant Investor - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules