Posted by Economic Free Fall
TUESDAY, OCTOBER 11, 2011
Silver's Extremely Bullish COT Report
I mentioned last week how bullish the COT reports for gold and silver were with huge drawdowns in the Specs' long positions together with extreme short-covering among the Commercials. The latest COT report shows pretty much a standstill for gold, but that cannot be said for silver. The short covering has continued and you really have to wonder just how much can be sold by the speculators. They are holding close to unprecedented small net long positions and the overall picture has a bullish shine to it, not seen since 2003. And as far as I'm concerned you have trillions of more reasons to own silver today than eight years ago.
One must come to the conclusion that silver is truly charging up here, possibly getting ready for a major move north in the short-term. There hasn't been a single occasion during this bull market where such a COT report hasn't been followed by heavy upside moves. Here are the silver charts from all the previous years during the last decade with similar COT numbers. I have marked the precise time of the most bullish weekly COT report.
As you can see for yourself they usually mark the exact bottoms and are very reliable to pinpoint them. It's harder to pick tops in a bull market using the COT-tool (or any other indicator for that matter), as things can remain overbought way longer than you would expect as more and more money flows into that specific market. Anyway, we should be happy for these opportunities in the silver market as it gives new participants the chance to enter cheaply.
One must come to the conclusion that silver is truly charging up here, possibly getting ready for a major move north in the short-term. There hasn't been a single occasion during this bull market where such a COT report hasn't been followed by heavy upside moves. Here are the silver charts from all the previous years during the last decade with similar COT numbers. I have marked the precise time of the most bullish weekly COT report.
As you can see for yourself they usually mark the exact bottoms and are very reliable to pinpoint them. It's harder to pick tops in a bull market using the COT-tool (or any other indicator for that matter), as things can remain overbought way longer than you would expect as more and more money flows into that specific market. Anyway, we should be happy for these opportunities in the silver market as it gives new participants the chance to enter cheaply.
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