Speculators' Net-Long Silver Positions Rise To May Levels -- CFTC

NEW YORK (July 15) The net-long positions for large speculators in silver futures and options on the Comex division of the New York Mercantile Exchange rose for the second week in a row, according to U.S. government data released late Friday.

For the week ended July 9, large speculators in the Commodity Futures Trading Commission’s weekly commitment of traders report built on their modestly bullish silver position, bringing the net-longs to their highest level since May 21 for the legacy report and May 7 for the disaggregated data. Activity by the speculators in gold and platinum was mixed between the two reports, but their net-long palladium position rose. The copper short position slipped in both reports.

Price action in metals was mixed, too, during the time period covered by the report. For the week to July 9, Comex August gold rose $2.50 to $1,245.90 an ounce, while September silver slid 17.1 cents to $19.138. Nymex October platinum rose 80 cents to $1,368.60, while September palladium gained $8.45 to $697.35. Comex September copper fell 7.85 cents to $3.0645 a pound.

The silver net-long position for the managed-money accounts rose again on a combination of new bullish positions (adding 88 contracts) and closing out bearish ones (cutting 853 contracts). They are now net-long 4,705 contracts. Producers trimmed their net-short position, having added slightly more gross longs than shorts. Swap dealers added to their net-long position by adding gross longs and cutting gross shorts.

In the legacy report, the silver net-long for non-commercials increased modestly. They added 371 gross longs and added 235 gross shorts. They are now net-long 5,807 contracts. Commercials are net-short, but reduced that position as they cut more gross shorts than gross longs.

Managed-money accounts in the disaggregated report boosted their net-long position in gold futures and options to 35,691 contracts, adding slightly to the gains seen in the last report. Managed-money accounts added 3,389 gross longs and added 2,000 gross shorts, meaning the new long positions more than offset the new bearish positions. Producers slightly lowered their net-short position as they added a few more gross longs than gross shorts. Swap dealers added a few more gross longs than shorts, lowering their net-short position.

Non-commercials in the legacy report took a different route. Large speculators decreased their net-long position by adding 2,956 gross longs and 6,400 gross shorts. They are now net-long 27,845, the smallest since Kitco began tracking this position in May 2007. Commercials are net-short, but lowered that position by adding many more gross longs than gross shorts.

HSBC said noted that the rise in gold gross speculative short positions “marked the fourth consecutive week of posting a record-breaking high.”

TD Securities said while speculators added a chunk of new gross shorts, these traders also added new gross longs, saying speculators “strapped on some considerable length after hitting lows and due to QE (quantitative easing) tapering ambiguity.”

Furthermore, Barclays’ analysts said, some of these new short positions may be short-lived. “The data reflect the activity before the Fed minutes (were released Wednesday), thus shorts are likely to have been covered,” they said.

Managed-money accounts in platinum decreased their net-long position to 17,229 contracts, having cut 160 gross longs and added 202 gross shorts.  In the legacy report, on the other hand, non-commercials in platinum increased their net-long position, which now is 22,232 contracts, having added 121 gross longs and cut 1,131 gross shorts.

In palladium the managed-money accounts lifted their net-long position to 20,096 contracts. They added 661 gross longs and cut 236 gross shorts. In the legacy report, non-commercials added 742 gross longs and cut 648 gross shorts, raising their net-long to 20,684 contracts.

Analysts at Standard Bank noted the rise in speculators’ net-long puts it now 51.5% of the market’s open interest, up from 48.9%. “This is only slightly above the five-year average of 48.4%, but nevertheless highlights, as we have seen repeatedly this year, how easily investor interest gets carried away and places the palladium market in a strained and vulnerable position,” they said.