Still Struggling With Silver Open Interest (updated for new CoT)

Maybe you can help me to make sense of these numbers?

I think you know that the current open interest situation has me perplexed. First of all in gold, since last Thursday, price has fallen by over $26 yet total OI has risen by over 6%, from 420,766 to 446,274. So, who is shorting so much that price is falling? Perhaps more importantly, who is on the other/buy side of those trades? Unfortunately, the deliberately opaque CoT will provide only a few clues.

But what really has me bugged is the OI of silver, specifically since late 2010. Why then?

QE2 was announced in early November of 2010.

It began in December and proceeded along at approximately today's QE∞ pace of $85B/month until June of 2011.

Silver rallied through November and December 2011.

It corrected for three weeks in January 2011 before stopping at "Turd's Bottom".

It then rallied through March on speculative buying.

It spiked in April as fears of a "commercial failure" sparked Cartel short covering.

In late October of 2011, MFGlobal collapsed and took with it nearly $2B in clients assets as well as the integrity of the CME and the futures markets as a whole.

When QE2 ended in June of 2011, price was near $35. When QE∞ was announced in September of 2012, price was still near $35.

So, while keeping in mind the points above, kindly consider the data below:

DATE PRICE LSLONG LSSHORT RATIO COMM LONG CARTEL SHORT RATIO TOTAL OI

11/2/10 $25 52,625 12,834 4.1 31,152 87,200 2.8 158,633

1/4/11 $31 40,483 10,488 3.87 29,598 79,349 2.68 136,931

1/25/11 $27 38,699 10,473 3.69 29,818 72,964 2.45 125,229

3/29/11 $37 47,764 10,625 4.49 32,587 87,882 2.7 138,486

4/26/11 $49 43,078 18083 2.38 35,763 78,297 2.19 143,341

So, what do we see here? What jumps out at you? For me, it's:

The remarkably steady LargeSpecShort position. Steady, that is, until the 70% spike in April of 2011.

The consistency in the size of The Cartel long position, which only increased in the final days of the rally.

The Cartel gross short position was just as large in November at $25 as it was in late March at $37. In fact, compare the entire entry of 11/2/10 vs the entry of 3/29/11. The only changes are that total OI has fallen by 20,000 while price has risen by nearly 50%. Hmmmm.

What happened next is, of course, market histoire. The Sunday Night Massacre, five margin hikes in nine days, QE2 was replaced by Operation Twist, another 30% beatdown in September of 2011 and, of course, the collapse of MFingGlobal.

Now look at this. After a bottom last summer, price began to rally in advance of the QE∞ announcement in September. Here's where we stood then:

DATE PRICE LSLONG LSSHORT RATIO COMM LONG CARTEL SHORT RATIO TOTAL OI

9/11/12 $34 41,371 9,889 4.18 32,206 79,478 2.47 121,050

Picking up where we left off in 2011, what has changed? Not much.

The LargeSpecShorts are back to the average, around 10,000.

However, the LargeSpecLong, CartelLong and CartelShort categories are virtually unchanged.

And the total open interest is down by 20% or so but you'd have to expect that, post MFingG.

And now look at this, the CoT from last Tuesday:

DATE PRICE LSLONG LSSHORT RATIO COMM LONG CARTEL SHORT RATIO TOTAL OI

2/5/13 $32 42,449 6,588 6.44 46,293 98,239 2.12 151,512

Now what jumps off the page at you? Could it be this?

Since the announcement of QE∞, total OI has risen by 25% but price has fallen by $2.

LargeSpecLongs are pretty much where they've always been, in the low 40s.

LargeSpec Shorts are way down...to levels never seen before...but that just happened last week and I'm not yet sure what to make of it. A reporting error or reclassification?

But get a load of The Cartel long and short positions. The true outliers. They've added 14,000 longs and 19,000 shorts since last September.

So what the heck does all this mean? I don't know. I wish I did. The latest LargeSpec numbers and ratio are such an aberration that it suggests a sharp selloff is forthcoming to bring the net long ratio back to within historical "norms". But if that were to happen, it would likely have minimal impact on the comparative Cartel long and short positions and that would seemingly be where all the action is. And why the heck isn't price rallying? The Fed is printing money at the same pace as early 2011 but, instead of rallying, we're getting a selloff. Could this current selloff be an event similar to the selloff in January of 2011 which preceded a 3-month rally from $27 to $49? Back in January of 2011, The Fed had been printing for a month yet price was inexplicably falling and angst was very high. Sound familiar?

So, anyway, this thread is intended for your feedback and analysis. I'm making it a "sticky" in order to bring it to your attention. Comments on this topic only, please. Distracting comments on politics and chemtrails will be moderated.

I look forward to reading your comments.

4:00 pm EST Friday UPDATE:

The new silver CoT is in and it's a DOOZY! Unless JPM can crash price down through $26, I highly doubt that they can shake out very many of the extraordinarily large Cartel gross long position. IF THAT'S THE CASE, this forced beatdown isn't going to go much lower.

For the week, the LargeSpecs reduced their net long by 3,700 contracts and this drops the net long ratio back to a more normal 4.94:1. And the small specs dumped 1,400 net longs, too. All of the action was again in the "Cartel/Commercial" space. They added an astonishing 5,889 longs!!! This brings their total to a has-to-be-a-misprint 52,182. Look back up this post...That is anywhere from 50% to 90% higher than the gross long position they held in 2011. All of this buying precluded any covering by JPM et al. They actually had to add naked shorts...another 740...bringing their total to the 2nd-highest I've ever seen at 98,979.

No wonder we saw the beatdown from Wednesday through today! Price has fallen by $1.18 since the survey on Tuesday but what have they accomplished? Of course, it's impossible to say but I'll leave you with this. At the survey, price was $1.18 higher and the total silver OI was 152,817. As of last night, total OI had grown to 154,364. Since OI was alos growing while price was falling during this last reporting week, the further growth in OI since suggests a continuation of the trend. Most likely, specs have continued to sell and get short while The Cartel longs have continued to grow.

WOW! Get some rest this weekend. If you thought this week was wild and crazy, next week may push you over the edge! It appears that we are witnessing history, in real time.

DATE PRICE LSLONG LSSHORT RATIO COMM LONG CARTEL SHORT RATIO TOTAL OI

2/12/13 $31 40,205 8,133 4.94 52,182 98,979 1.90 152,817