This report comes to you on the eve of what I suspect is the last day on this blogspot as we are off to the www.silvergoldsilver.com site. After mulling over the COT report, and then making many many phone calls, something is not sitting right with me.
Lets first post up the COT report, I have copied it straight over from Harveys Blog (click here for more):
There are a few things that are not lining up for me. You know me, I could sit here and cheerlead this to death right now, but thats not my place. Do I think silver will get to $500? Yes. By next week? No. So dont shoot the blog that calls it the way we see it when we talk a negative piece.
Whats strikingly weird is Fridays PM trades. Gold was okay late into the bell, but silver was not. The weird part is that the big boys most certainly get the COT report before its printed. Dont think for one second they dont. This is the scary part. Such a 'bullish' COT report for both metals, some would argue the best COT report to memory. So why the weak Friday close? Equities bring the PM's down with them late in the day? If you go back and do some research, after such bullish COT reports we usually catch a major bid. This is my disconnect.
My second disconnect was the amount of contracts covered by the Morgue et al. And in order for this amount to be covered, you need and equal amount to be sold (captain obvious).
This takes me back to 2008. On boring days on the desk, we would pick on an illiquid stock, a few people would short it while we bought it, then we would switch rolls. Washing was common, the regulators didnt give a shit because we gave the ECN's so many liquidity credits and no one was getting hurt. When the warnings would come in, no one cared...seriously they had bigger problems as these were the days leading up to the 2008 clusterfuck.
Que todays COT report. I have a suspicion that, although it looks like the Morgue et al. is covering that massive pile of shorts, its their own selling they are covering. Most of the paper selling happened in illiquid markets. Not sure if this many contracts could be filled they way they were.
Mark my word: if Gold and silver correct down from here, the COT report from here on out is null and void.
If we go up here and never look back, you can call this a call a complete miss.
Somethings not right with this duck.