The Commitment of Traders (CoT) data from the CFTC revealed the largest net short position (roughly US$1 billion net notional) ever by large speculators (the category of traders largely comprised of hedge funds & CTAs) in silver futures:
Perhaps even more notable is that the latest report shows that commercials (producers and swap dealers) have moved to a near neutral positioning - this is extremely rare because commercials are a natural short in the market due to their hedging bias (producers use futures to hedge production etc.).
Another curious aspect of the current situation in silver is that price action has been range-bound and market sentiment is firmly in neutral territory. Typically when we have seen commercials cover shorts and hedge funds/CTAs piling on shorts in precious metals futures it has taken place along with a powerful price downtrend and extremely bearish sentiment. In addition, we aren't seeing similar market participant positioning in gold futures; silver has recently lagged gold's price action most likely as a result of futures speculators shorting silver much more aggressively than gold.
From a technical perspective silver has languished within a relatively tight range for more than a year, and remains 'pinned' to a high volume-by-price bar at the center of its recent multi-year range:
An enormous amount of volume has been churned between $16.00 and $19.00 during the last several years - this makes any future breakout/breakdown from this range especially significant (an enormous amount of 'potential energy' has been built up within this tight range). Given the oscillating nature of silver on multiple time frames we can be sure that rallies will continue to be faded (sold into) and sell-offs will find eager dip buyers. However, once this range resolves the ensuing directional move will be violent and unforgiving (the eventual breakout above $19 will target $25 at minimum and that $25 target should be achieved within a matter of weeks once $19.00 is eclipsed).
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