Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
The US Dollar is the Driver of the Gold & Silver Sectors - 28th Jul 21
Fed: Murderer of Markets and the Middle Class - 28th Jul 21
Gold And Silver – Which Will Have An Explosive Price Rally And Which Will Have A Sustained One? - 28th Jul 21
I Guess The Stock Market Does Not Fear Covid - So Should You? - 28th Jul 21
Eight Do’s and Don’ts For Options Traders - 28th Jul 21
Chasing Value in Unloved by Markets Small Cap Biotech Stocks for the Long-run - 27th Jul 21
Inflation Pressures Persist Despite Biden Propaganda - 27th Jul 21
Gold Investors Wavering - 27th Jul 21
Bogdance - How Binance Scams Futures Traders With Fake Bitcoin Prices to Run Limits and Margin Calls - 27th Jul 21
SPX Going for the Major Stock Market Top? - 27th Jul 21
What Is HND and How It Will Help Your Career Growth? - 27th Jul 21
5 Mobile Apps Day Traders Should Know About - 27th Jul 21
Global Stock Market Investing: Here's the Message of Consumer "Overconfidence" - 25th Jul 21
Gold’s Behavior in Various Parallel Inflation Universes - 25th Jul 21
Indian Delta Variant INFECTED! How infectious, Deadly, Do Vaccines Work? Avoid the PCR Test? - 25th Jul 21
Bitcoin Stock to Flow Model to Infinity and Beyond Price Forecasts - 25th Jul 21
Bitcoin Black Swan - GOOGLE! - 24th Jul 21
Stock Market Stalling Signs? Taking a Look Under the Hood of US Equities - 24th Jul 21
Biden’s Dangerous Inflation Denials - 24th Jul 21
How does CFD trading work - 24th Jul 21
Junior Gold Miners: New Yearly Lows! Will We See a Further Drop? - 23rd Jul 21
Best Forex Strategy for Consistent Profits - 23rd Jul 21
Popular Forex Brokers That You Might Want to Check Out - 22nd Jul 21
Bitcoin Black Swan - Will Crypto Currencies Get Banned? - 22nd Jul 21
Bitcoin Price Enters Stage #4 Excess Phase Peak Breakdown – Where To Next? - 22nd Jul 21
Powell Gave Congress Dovish Signs. Will It Help Gold Price? - 22nd Jul 21
What’s Next For Gold Is Always About The US Dollar - 22nd Jul 21
URGENT! ALL Windows 10 Users Must Do this NOW! Windows Image Backup Before it is Too Late! - 22nd Jul 21
Bitcoin Price CRASH, How to SELL BTC at $40k! Real Analysis vs Shill Coin Pumper's and Clueless Newbs - 21st Jul 21
Emotional Stock Traders React To Recent Market Rotation – Are You Ready For What’s Next? - 21st Jul 21
Killing Driveway Weeds FAST with a Pressure Washer - 8 months Later - Did it work?- Block Paving Weeds - 21st Jul 21
Post-Covid Stimulus Payouts & The US Fed Push Global Investors Deeper Into US Value Bubble - 21st Jul 21
What is Social Trading - 21st Jul 21
Would Transparency Help Crypto? - 21st Jul 21
AI Predicts US Tech Stocks Price Valuations Three Years Ahead (ASVF) - 20th Jul 21
Gold Asks: Has Inflation Already Peaked? - 20th Jul 21
FREE PASS to Analysis and Trend forecasts of 50+ Global Markets by Elliott Wave International - 20th Jul 21
Nissan to Create 1000s of jobs with electric vehicle investment in UK - 20th Jul 21
Bitcoin Halvings Price Forecast and Stock to Flow Analysis - 18th Jul 21
Dell S3220DGF Unboxing and Stand Assembly - 32 Inch 165hz Curved Gaming Monitor Amazon Discount - 18th Jul 21
What Does The Fed Mean By “Transitory Inflation” And Why Is It Important To Understand? - 18th Jul 21
Will the US stock market’s worsening breadth matter? - 18th Jul 21
Bitcoin Halving's Price Projection Forecasts Trend Trajectory - 18th Jul 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Silver: What COT Analysis Tells Us

Commodities / Gold and Silver 2014 Nov 25, 2014 - 06:46 PM GMT

By: DeviantInvestor

Commodities

Each week the CFTC publishes a Commitments of Traders Report (COT) in which “non-commercial” and “commercial” long and short futures positions are reported.  Many people have expressed doubts as to the validity, accuracy and consistency of the data.  However, my experience is that the data is mostly relevant, accurate, and useful in the long term, but not necessarily important each week.


Graph the price of silver (green) on a log scale against the COT data showing “non-commercial” net longs less the “commercial” net longs.  In theory this shows when the “smart” money is positioned to profit from high or low prices.

Silver (log) vs. Net Longs Comm less Non-Comm

The chart over the past 7 years is messy so focus on the lows in silver prices and the lows in the COT net longs as I defined above.  Note the few times in the last 7 years when the net longs were less than 30,000.  Each instance was followed by a bounce in the silver price, some huge and some short lived.  Note also that the lows in silver prices during 2011 and 2012 were lower lows consistent with the lower lows in the net-long COT data.  However, the lower lows in silver prices for 2013 – 2014 were unlike the higher lows in the net-long COT data.  Important?  Possibly, but it does support my view that silver just put in a major low.

Graph the price of silver on a log scale against a weighted index that I call the Confidence/Risk Index (C/R Index).  The index is composed of the above COT data, some moving averages, and the relative strength of prices.  It combines the COT data, timing oscillators, and the spread between price and a long term moving average of price.

Silver (log) vs. Confidence/Risk Index

Note the silver lows (green) and the lows in the C/R Index.  The C/R index is currently the third most over-sold in the past 15+ years.  This index is currently indicating that a major bottom occurred in silver earlier this month.  We won’t have confirmation for some time but the indications are strong.

Bullish Indications for silver:

  • Demand for physical silver is strong. This includes industrial, medical, and especially investment demand.
  • In the long term the price of silver correlates well with national debt, and the national debt is trending strongly upward.
  • Increasing global warfare will be bullish for silver and commodities, and will increase anxiety which will drive more silver investment demand.
  • In the present currency wars and their “race to the bottom” commodity prices will be the winners. Silver and gold will benefit.
  • Much more fundamental and technical data supports the bullish case – but not listed here.

But this time is different (sarcasm alert!)

  • The US congress will rein in spending, downsize the military, reduce entitlement spending, refuse contributions and payoffs from large corporations, and force the US government to live within its revenues. And then silver will decrease in price.
  • Unbacked paper fiat currencies will retain their value, for the first time in history, and remain strong for the next century.
  • Bubbles in bonds, the US dollar, stocks, and Wall Street bonuses will continue inflating for the next decade or two with only minor corrections.
  • Government debts will rise exponentially forever.
  • And American citizens truly like, respect, and trust their leaders.

This looks, for many reasons, like a major low in silver, and I expect to see silver at new highs in 2015 or 2016.  Note the following graph of silver prices on a log scale since 2010. 

Silver Log Scale

THE recognized expert regarding COT data is Ted Butler.  His subscription service provides more detailed analysis of that data.

From Peter Schiff:

“But there is no great mystery or difficulty in creating inflation or cheapening currency.  All that is needed is the ability to debase coined currency, print paper money or, as is the case of our modern age, create credit electronically.”

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

© 2014 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.


© 2005-2019 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