I don’t find the COT reports to be nearly as insightful or predictive as other analysts, but the action over the past few weeks is worth mentioning. Commercial traders have covered their short positions to such an extent that the total commercial short position is now at the lowest level since 2001!
Gene Arensberg of (www.gotgoldreport.com) has put together an excellent video presentation below explaining the latest COT report in more detail. He expects a “massive short-covering rally” in precious metals. Whether or not such a rally transpires from the reduction in short positions remains to be seen, but I believe investors will look back on sub-$30 silver a year from now and wish they would have bought more aggressively.
* During the week ended June 26, commercial traders covered nearly 5,000 contracts or a whopping 30% of their net hedge book
* This is the lowest LCNS since September of 2001, prior to the launch of the current silver bull market
* The big hedgers have as little concern for downside risk at this point as they did when silver was $4.18 in 2001
* Swap dealers are now record net long silver, the most in the history of recording this data
* This suggests the silver market is likely oversold and ripe for a massive short-covering rally