The goose that lays silver eggs

COT Data

On the weekly chart below you will see how the “big money” is moving around in this market. Keep in mind that this is a much lower volume traded market as compared to gold, so even small moves can push the price up or down. The COT legacy report does show Commercials -52,692 contracts net-short and Large Specs 33,766 net-long. These numbers actually are broken out in the disaggregated report. Commercials: Producers are -47,059 net-short and Swap Dealers are

-5,633 net-short. Large Specs: Managed Money are 26,841 net-long and Other Reportables are 6,925 net-long. I find this report to be much more transparent. Looking at the weekly below you can see the changes in these groups and how they affect the markets. Read my information under fundamentals to see for yourself if the silver ETF SLV could be causing the current spike in Silver.

Market Pulse contest question: For all who answer this correctly, you will receive a Free set of CRB Historical Charts covering 45 markets. I am sorry about last week’s contest question and providing a bad email. I fixed that this week so please give it a shot. I will post the correct answer next week.

Which U.S. state is the fourth (4^th) largest oil producer in the U.S.A.? Sorry about last week. All correct answers emailed to Gary Kamen at Gary@crbtrader.com will receive the free set of current historical charts absolutely free.

Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.

If you need help understanding how to understand how to use the COT report to your benefit, please email me at Gary@crbtrader.com and put COT report in the subject line. Please include your name and telephone number in the email.

Proceed to Page 3 for this week's detailed fundementals charts...

Fundamentals

SLV — Could the silver EFT be causing the high price of silver?

In April 2006, two years after GLD (gold ETF) was launched, Barclays launched the silver ETF. At this time it was reported that SLV had storage of 21 million ounces of silver.

Controversy followed as the Silver Users Association (SUA-1947), an organization of industrial silver users, pressed the SEC to kill SLV. SUA said SLV would allow large stock investors a legal way for them to squeeze the silver market. The SUA knew that a huge amount of silver bullion would be removed from the market and that was a much larger issue for silver than it was in gold.

Move five years forward to today, and what are we seeing? The last report from SLV in October 2010 was that they had 328.55 million ounces in storage. Many silver experts question if they really have this much in storage. If they do, then the SUA’s fears definitely have come true. Recently, a SUA representative was quoted as saying “Silver is exploding up in a way that only speculation can drive.”

While this causes serious rises in cash costs for industrial silver users, it does give retail traders an incredible opportunity to make money. Looking at the weekly chart you can see when this major uptrend started. First week of September 2010 you see silver breaking over $20. Only one real correction during the first three weeks of January 2011, and the rest is history. Great history if you caught this train (major trend) up.

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