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Silver Bullishness At 12-Year Low

Movement Capital profile picture
Movement Capital


  • Commodities: Silver traders have a historically low amount of long positioning, speculators reduced their long exposure to copper futures, and soybean meal producers and users are very net short.
  • Currencies: Traders significantly cut their long CAD/USD exposure, JPY/USD flipped from a crowded short to a crowded long in three months, and dealers are heavily short NZD/USD.
  • Stocks: Speculators haven’t been this net short Nikkei futures in a decade, are still quite long S&P 500 e-mini futures, and are net long $1.5 billion of VIX futures.

Note: My approach for analyzing CoT data to reveal how different types of traders are positioned in the futures markets is outlined here. If you missed it, give the article a read to see the method behind my analysis. All data and images in this article come from my website.

This article outlines how traders are positioned and how that positioning has recently changed. I break down the updates by asset class, so let's get started.

Commodity Futures Positioning

I've been surprised to see speculators not add to more of their long exposure in cocoa (NIB) futures. The chart below shows my favorite metric for commodity positioning. It takes the net (long-short) position for each trader category, scales it by the market's open interest (total # of outstanding contracts), and normalizes that net position as a percentage of open interest (OI) into a 5-year percentile.

If my indicator is at 100%, it means the net position for that trader category (as a % of OI) is higher than it has ever been over the past five years. If it's at 0%, it means their position is the lowest it's ever been over the same time frame. This way, I have a single indicator to compare the positioning between markets of totally different sizes.

This 5-year percentile metric pointed out the extreme speculative net short position in cocoa last summer. Cocoa has since rallied ~40% year-to-date and I fully expected to see a massive amount of speculative long positioning. That's not the case though, and spec positioning is relatively neutral relative to the last five years.

The other trader category I look at is producers and users, sometimes called "commercials". Producers and users don't trade to make a profit (like speculators), but they trade to hedge their price risk. Producers hedge by selling futures to lock in

This article was written by

Movement Capital profile picture
Eversight Wealth is an independent flat fee investment advisor offering financial planning and investment management services. We help investors build low-cost diversified portfolios, create comprehensive financial plans, and save money with a flat annual fee. Formerly Movement Capital.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (6)

Dr Rick Gold profile picture
Long Gold and Silver. The next bull is getting set to run. Don’t sell the rips, buy the dips.
Gosh, Oh My! profile picture
The Trap is set!
Gosh, Oh My! profile picture
It's said JP Morgan is way short Silver futures and way
Long Physical Silver.
The day will come when JP Morgan will have to close those futures trades.
I can wait for $100 Physical Silver.
How about you Folks?
This will happen once The Big Paper Holders ask for delivery and only get paper Dollars in return.
whats your read on 'why' VXX and /es are both so crowded, seems like should be opposite?
Movement Capital profile picture
Correct, you'd typically see positioning to be opposite in both contracts. Strangely not the case now. The early February moves in the volatility complex definitely reduced a substantial amount of short demand from the short vol products.
Thanks for the data .
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