Here is an updated chart of the Silver COT Commercial net short to long position (i.e. the number of short contracts they hold against long contracts), The ratio is in red and the price of silver is outlined in blue,

As commented on yesterday one can clearly see the ratio is currently almost back to the Magic 2 number which has always been a very suitable entry point for any longer term investors.

What is especially fascinating is that during the last few months, the Commercials have been reducing down their net short position substantially even whilst the price has risen strongly. In the past if you study the graph they have generally chosen to reduce down their short weighting on a falling price. It is little wonder then that the price has exploded in the way it has of late, as it shows there has been a little willing to stand in the way of this racing train.

Another point to impress on any wannabe top callers here is that the silver price has never topped out with such a low short ratio, in fact on every other run up preceding this one, tops have tended to correlate with spiking high short weightings. As the graph clearly depicts the ratio down close to present levels has almost always proved to be quite the opposite, a very suitable buy signal.

Combine this data with the present Open Interest stats which are still mind numbingly low compared to previous peaks and where we are in the cycle, and I think it’s entirely reasonable to say that this run up still has an awful long way to go.

The future’s very bright for all things shiny,
Best,
Rich (Live from ‘The Silver Rocket Ship’)

RG with two mini-encores...

Gold Silver Ratio,..