Small but very telling structural changes continues in this week’s Commitment of Traders report, once again highlighted by another drop in adjusted Net open interest. Another telling line item, is the net short position of the 4 largest commercial traders, which is dominated by JP Morgan, dropped 5.9% to a net short position of 39,647 from 42,167 contracts week/week. The bullish factor here is not just the drop in the net short position but the concentration levels, which accounts for the change in adjusted net open interest, down 1.67%, currently at 51.21%. The 8 largest commercials also had a significant drop in the net short position, illustrating that they didn’t take control of the short positions covered by JP Morgan and the other 3 largest commercial traders. Their net short position decreased 2,676 contracts in addition to their concentration levels contracting 1.34% to 70.63%. Additionally, the commercial spread position increased which means they added to their gross long position as they are already very net short silver futures in general, while the net short position of total world silver bullion inventories decreased 1.34% which is quite significant given it is estimated to be between 800m – 1B ounces.
(Click chart for larger image)
Summing this week’s COT report up, all remains bullish on the silver front, with very important structural changes continuing this trend over the past couple of months and even 6 weeks as seen through the chart above. The changes in concentration levels by the four largest commercial banks, adjusted net open interest and net short position of world silver bullion inventories decreasing significantly even over just the last 6 weeks. As I have said in the last 4 or 5 silver COT updates, I'm expecting this same trend to continue, although week/week trends will likely show volatility going forward.
