From Ed Steer:

On Friday, both gold and silver had a positive day...as did the HUI. What happened yesterday was similar to what happened on Wednesday. Then Thursday came along and these gains vanished...so I'm reluctant to read too much into Friday's action. However, oil was up $3.80 a barrel, and one would figure that gold and silver should have done better...but they didn't.

Well, the open interest numbers for Thursday finally make some sense in gold for a change. Gold o.i. was down 4,079 contracts...and silver fell another 1,063. These numbers are very believable.

But now for the Commitment of Traders. Ted Butler and I had a chat about these long anticipated numbers, and here are the highlights...such as they are. In silver, the tech funds added a tad over 1,200 contracts to their net long positions. One would have expected that number to have dropped...not gone up...because the silver price has been dropping. The tech funds in the Non-Commercial category are supposed to be pitching their longs and the Commercial traders are supposed to be covering their shorts. That obviously didn't happen. To add to the mystery, the traders in the Commercial category added about 800 longs. This is perfectly legal, as they can go long instead of covering shorts...if that's what they wish to do. The big changes were in the spreads. In the Non-Commercial/tech fund category, 14,208 spread trades disappeared, and in the Commercial category another 12,000 were also removed. Total o.i in silver dropped 26,730 contracts for the week...virtually all of it spread related. But the '8 or less' traders are now short 83% of the total silver market...up 1% from the COT the previous Friday. Other than the spreads, the COT in silver was almost a non-event. By the way, the silver ETF...SLV...added another 3.5 million ounces on Thursday despite the massacre.

In gold, the Non-Commercial/tech funds decreased their longs by about 5,400 contracts. The Commercials (including the '8 or less traders') improved their position by roughly 14,000 contracts. They did this by adding 5,800 contracts to their long position and covering 8,200 shorts. The other big area of activity was the Nonreportable category where the thousands of small traders do business. Here they added 5,570 contracts to their long positions and a whopping 12,712 contracts to their respective short positions. I must admit that I'm somewhat (more than somewhat, actually) suspicious of this. Here's the reason. The Non-Commercials and Commercials are required to report their trading positions to the CFTC by the end of trading on Tuesday. The CFTC takes these numbers and plugs them into the spread sheet that produces the COT report. If it doesn't balance (which it never does), they arbitrarily assign long and short positions in the Nonreportable category so that it does balance...because the number of shorts and longs must be the same. This category is a balancing mechanism for the other two categories. It's my opinion that if everything that should have been reported by Tuesday's cut-off was actually in there, those positions in the Nonreportable would be entirely different...as would the rest of the report. The long form of Friday's COT is linked here.

I spend a lot of time (as does Ted Butler) talking about the '4 or less' or '8 or less' traders. Who are they? Here's the members list of the LBMA. There are eleven members in the category of Market Maker. They are the first eleven names on the list. It's pretty safe to say that most, if not all, of these traders are there. The list is linked here.

Today's story has to do with another infusion of cash into the banking system by the Fed...and the ECB. I see that the Fed has increased its term auction facility to $150 billion/month. In December it was $40 billion/month. The problem is still that banks don't want to lend to each other. The story is from Bloomberg and is entitled "Fed Revs Up Emergency Lending in Latest Jolt to Credit Market". The link is here.

Today's fun video is a bit of a change from the normal music video. It's a video about a pool shark. I've always considered excellence with the billiard cue to be the signs of a misspent youth...and that would be from personal experience. That's not quite the case with this one. Click here.

Another winning day on the Dow. It was heading for negative territory, and below 13,000...but that never happened. I also note that the jobs report showed a loss of only 20,000. But that number included 267,000 fictitious 'birth/death model' jobs which the BLS made up out of thin air. All in a day's work for the US government.

Enjoy the rest of your weekend and we at CDR+ will see you here on Tuesday.


Casey Research correspondent-at-large Ed Steer is a keen observer of the financial scene and a board member of GATA.org.