Major Short Squeeze Coming In Silver [iShares Silver Trust (ETF), SPDR Gold Trust (ETF), ProShares Ultra Silver (ETF)]

silver barsGold Silver Worlds: I wrote a post focusing on Silver’s technical price action and sentiment almost a month ago, titled Decision Time For Silver. Interestingly enough, there has been no decision yet. Markets are quite ironic at times, but the pressure continues to build. Therefore, I thought it was prudent to update traders on recent developments as I have a feeling the action is about to start!

Here is an interest fact. When it comes to the price itself, there has been no change over the 12 month and 6 month time frames. Consider the fact that Silver traded at around $19 in June 2013 and it also traded around $19 in December 2013. As I write this post, Silver is trading at… yes you guessed it… $19 per ounce.

silver price COT 2008 May 2014 category technicals

silver price vs COT data – from 2008 till May 2014

However, despite no change in the price, Silver’s sentiment has either remained extremely negative by looking at certain indicators, or actually deteriorated even further by looking at others. If we observe Chart 1, we can see that hedge funds and other speculators currently hold only 766 net long contracts, a far cry from 40,000 plus seen in September 2012, as the Gold began its crash.

If speculators continue to cut positions for another week or so, we will be officially net short for the first time in a decade. Obviously this data is focused on futures only, however if we group together futures and options positioning as CTFC does, we can see that bulls have completely disappeared as net longs have actually turned net short for the first time in 11 years.

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