Yesterday's Commitment of Traders report was a disappointment in silver. I was expecting an improvement... and it was anything but... as the bullion banks increased their net short position by a whopping 5,775 contracts. Ted Butler pointed out that a very large chunk of that perceived deterioration was actually the 'raptors' in the Commercial category [which is any trader that is not one of the '8 or less' bullion banks] selling long positions for a profit. The act of doing that automatically increases the 'net' short position... because the long is extinguished in the Commercial category while the corresponding short position is closed out in the Non-Commercial category... as the tech funds in that category are starting to cover shorts and go long. The act of doing that is what has been driving the price higher.

As of Tuesday's cut-off for yesterday's COT report... the Commercial net short position in silver sat at 262.7 million ounces. The '8 or less' bullion banks that 'do the dirty' inside this category were short 359.3 million ounces... and hold 71% of the entire silver short position in the Commercial category. Guess who controls the price? Preposterous, isn't it?

In gold, the bullion banks improved their net short position by 5,526 contracts... 550,260 ounces. As of the Tuesday cut-off, the total Commercial net short position in gold sat at 22.2 million ounces. The '8 or less' bullion banks are short 25.6 million ounces. Which, in a nutshell, means that if these eight bullion banks weren't there... the rest of the traders in the Commercial category are net long... so these bullion banks are the only thing standing in the way of much higher gold prices. And that, dear reader, is exactly why the are there. Ditto for silver... except in silver, the situation is beyond grotesque. Ed Steer