Speculators Increase Bullish Silver Positions In Latest CFTC Data

July 10, 2013

FRANKFURT (July 10) Speculators added to bullish silver futures and options positions on the Comex division of the New York Mercantile Exchange, according to U.S. government data, but their activity in other Comex and Nymex metals markets was mixed.

For the week ended July 2, speculators in the Commodity Futures Trading Commission’s weekly commitment of traders report saw their net-long positions in silver rise in both the legacy and disaggregated reports. Action in other markets was mixed, with large speculators boosting their net-long position for gold and platinum in the disaggregated report, but cutting it in the legacy report. These traders trimmed net-longs for palladium in both reports, while speculators’ net-short position in copper slid in each report.

Price action in metals was mixed, too, during the time period covered by the report. For the week to July 2, Comex August gold fell $31.70 to $1,243.40 an ounce, while September silver slid 24.3 cents to $19.309. Nymex October platinum rose $13.70 to $1,367.80, while September palladium gained $13.70 to $688.90. Comex September copper rose 6.7 cents to $3.1430 a pound.

Silver net-long positions for the managed-money accounts increased for the second week in a row, rising to 3,763 contracts. The rise came from adding 1,054 gross longs and cutting 2,124 gross shorts, which means new bullish positions were added and bearish bets cut. Producers are net short and increased that position as they added more gross shorts than gross longs. Swap dealers are net-long, but reduced that position by cutting gross longs and adding gross shorts.

In the legacy report, the silver net-long for non-commercials also increased. They added 2,164 gross longs and cut 1,861 gross shorts. They are now net-long 5,670 contracts. Commercials are net-short and added gross shorts while cutting gross longs.

The increase in large speculators’ silver positions shows some bullish interest, and analysts at Bank of America Merrill Lynch Global Research said to watch technical chart patterns for proof of any silver strength. They are keeping an eye on the $20.64 area. If the market rallies through there, then bulls may gain control. “Until then the downtrend remains for $17.33/$16.44,” they said.

Analysts at TD Securities said silver investors likely saw silver as a bargain when the metal hit new lows.

Managed-money accounts in the disaggregated report added to gold futures and options, rebounding from their record low net-long position registered in the previous report. The net-long grew to 34,301 contracts. Managed-money accounts added 4,225 gross longs and 1,121 gross shorts. Producers trimmed their net-short position as they added more gross longs than gross shorts. Swap dealers are net short and increased that position by cutting more gross longs than gross shorts.

Non-commercials in the legacy report, on the other hand, decreased their net-long position, having added 2,744 gross longs and 4,324 gross shorts. That meant the new short, or bearish, positions overwhelmed the new bullish bets. They are now net-long 31,289 contracts, the lowest level since 2007, as far back as Kitco records go. Commercials are net-short, but slightly cut that position overall when they added a few more gross longs than gross shorts.

“Gold gross speculative short positions broke the record all-time high for a third week, and gold net-long speculative positions run the risk of turning negative, in our view,” said HSBC.

TDS analysts said gold is still being hit by quantitative easing “tapering chatter,” referring to the Federal Reserve’s discussions on when to withdraw its stimulus measures.

Managed-money accounts in the platinum disaggregated report returned as buyers, lifting their net-long position. They are now net-long 17,591 contracts, having added a few more gross longs than gross shorts. 

Non-commercials traders in the legacy report for platinum trimmed their net-long position for the third week in a row. That position is 20,980 contracts, having added slightly more gross shorts than gross longs. Commercials are net-short. They increased that position by adding more gross shorts than gross longs.

In palladium, the managed-money accounts decreased their net-long position to 19,198 contracts for the second week in a row. They added more gross shorts than gross longs to raise the net-long position. In the legacy report, non-commercials cut a very small number of gross longs and added gross shorts, lowering their net-long to 19,295 contracts. Commercials added more gross longs than gross shorts, lowering their net-short position.

Large speculators in the copper market shed some of their net-short positions in both reports. In the disaggregated report, the copper net-short position for the managed-money accounts slid to 26,963 contracts, as they cut gross shorts and added gross longs. Funds cut many more gross shorts than gross longs, lowering their net-short position to 28,356 contracts.

Analysts at Commerzbank remain cautious regarding the still-heavy net-short position for copper. “Although they (speculative traders) cut their net short positions somewhat ... they still remain very negative towards copper,” Commerzbank analysts said

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