Funds Turn Bearish Silver, CFTC Data Shows
New York (Sept 22) Large speculators turned bearish in their Comex silver futures and options net holdings, according to data in one of the reports compiled by the Commodity Futures Trading Commission.
The disaggregated commitments of traders report from the CFTC showed large speculators now hold a net-short silver positioning, the first time since June 10. In the legacy report these traders are still net-long, but this is the ninth straight week they cut their bullish holdings. The most recent CFTC data is for the week ended Sept. 16.
Large speculators also cut their bullish gold holdings for the fifth consecutive week in both the legacy and the disaggregated reports as the negative sentiment toward precious metals, particularly in gold, continues.
The losses seen in the speculators’ metals positioning reflect what’s going on in commodities as a whole, said Koun-Ken Lee, strategist at Standard Chartered. He said for the week ending Sept. 16, the cumulative money flow from speculators in commodities was the lowest since January 2012.
“A broad, sweeping re-coupling of commodities to the USD (U.S. dollar) saw speculative longs retract and short speculative positioning grow,” Lee said.
Specifically regarding precious metals, he said “we expect this trend of lower precious net speculative positioning … to continue for as long as the USD trends higher. Only when the USD stabilizes do we expect commodity positioning to re-align with fundamental balances.”
These traders also cut their net-long positions in the platinum group metals, but saw mixed action in copper.
Metals prices mostly fell during the time period covered by the latest CFTC report. Comex December gold fell $11.80 to $1,236.70 an ounce. December silver slid 18.6 cents to $18.734. October platinum dropped $18.50 to $1,367.30 an ounce. December palladium fell $16.15 to $844.30. Comex December copper was the only metal to see prices rise, gaining 6.4 cents to $3.1660 a pound.
The reporting window closed just before the results of the Federal Open Market Committee meeting Wednesday, which triggered further price losses in metals.
Managed-money traders reduced their gold net-long position for the fifth straight week in this report, with their holdings now standing at 55,716, which is the smallest since June 10. These traders cut 4,962 longs and added 10,698 gross shorts. Producers’ net-short positions fell as they added gross longs and cut gross short positions. Swap dealers saw their net-short positions fall, too, but it occurred as they cut many more gross shorts than gross longs.
The non-commercial traders in the gold legacy report repeated their activity the disaggregated report. They chopped 8,122 gross long contracts and added 11,501 gross shorts. They are now net-long 82,661 contracts, also the smallest since June 10. Commercials are net-short and trimmed that position by adding gross longs and cutting gross shorts.
Barclays’ analysts said the increase in gross shorts puts speculators’ short positioning at its highest since the end of January. “Sentiment is turning increasingly bearish towards gold,” they said.
Bart Melek, head of commodity strategy at TD Securities, agreed. “Gold specs (speculators) continue to bail out from net long positions as the USD rallied amidst hawkish Fed expectations,” he said.
For the first time since June 10, managed-money traders pushed their holdings to be net-short in silver. They are now net-short 4,557 contracts, slightly less than the June 10 net-short position of 6,123 contracts. They cut 1,570 gross longs and added 5,223 gross shorts to move their net position into bearish territory. Producers decreased their net-short positions by adding more gross longs than gross shorts. Swap dealers also reduced their net-short position by cutting gross shorts and adding a few gross longs.
“Silver finds itself under considerably more pressure than gold: the white precious metal having already shed nearly 4% on Friday, it dipped to $17.30 per troy ounce as the new week got underway – its lowest level since July 2010,” said analysts at Commerzbank. “Money managers had already appeared very pessimistic even before the latest price slide, with positioning being net-short again in the period under review for the first time in three months. This largely came about as short positions were built up to just marginally short of a record high. (Net) short positions are likely to have been increased even further in the meantime. Silver’s price slump has caused the much-regarded gold/silver ratio to climb to 69, its highest level since June 2010.”
In the legacy report, non-commercials cut 1,518 gross longs and added 5,426 gross shorts, dropping their net-long position nearly in half, to 7,905 contracts. This is also the smallest since June 10 and the ninth week of straight cuts to the net-long position. Commercials are net-short and decreased that position by adding gross longs and cutting gross shorts.
Managed-money accounts in platinum decreased their net-long position for the second straight week, to 22,702 contracts by cutting 1,532 gross longs and adding 1,072 gross shorts. Non-commercials in platinum lowered their net-long position to 33,094 contracts in the legacy report for the third week in a row, and did so by cutting 1,172 gross longs and adding 1,127 gross shorts.
Melek said platinum speculators cut gross longs and raised shorts “amid a poor European demand environment and weak precious metals price dynamics.”
Large speculators’ net-long palladium holdings fell in the disaggregated report to 20,851 contracts, the second week of reductions to their net holdings, as they cut 2,661 gross longs and cut 729 gross shorts. The palladium legacy report saw non-commercials cut 3,440 gross longs and 1,234 gross shorts, lowering their net-long to 24,935 contracts.
The gold losses prompted investors to cut palladium net-long exposure, Melek added.
After spending a week in net-short territory, managed-money accounts returned to having a net-long position in the disaggregated report data. Their new net-long position now stands at 805 contracts. They added 3,469 gross longs and added 587 gross shorts. Large speculators in copper’s legacy report added to their net-short position, lifting it to 13,593 contracts. These traders added 291 gross longs but also added 4,124 gross shorts.