In Ted Butler's Archive


There are now so many unique and extreme circumstances at play in silver, that something very special is about to unfold. The data indicate that a general metals upturn in price is close at hand, and that silver should lead the way higher by a wide margin. The data contained in the Commitments of Traders (COT) Report released June 26th describes a bullish market structure in all CME metals with silver in a class by itself.

I had hoped for an increase in the technical hedge fund short position, but I didn’t expect an increase of the more than 8,500 contracts that were reported. The technical fund traders added the equivalent of 42.5 million ounces of silver to a short position that now measures more than 266 million ounces. Not only is it hard to conceive that these traders could be tricked into selling the world’s most undervalued asset short to such an extent and at such a low price, it is hard to conceive how they could have allowed themselves to step into what could be the biggest market trap in history.
Based upon everything that I look at, I believe that JPMorgan now holds its smallest COMEX silver short position since acquiring Bear Stearns in 2008 and may have eliminated its COMEX silver short position entirely. If I am correct, that means JPMorgan’s 350-million-ounce physical long position is a pure long position and need not be netted out by deducting a large COMEX short position. What could be more bullish?

It is also clear that large speculative traders are sharply aligned against the record level of hedge fund shorts. This is not something I’ve observed previously and I would be lying if I told you I wasn’t excited by it. There’s nothing about this setup that doesn’t look bullish to the extreme. I am shocked at how the collective setup for the COMEX/NYMEX metals has reached such extreme bullish levels, particularly in silver, and I am convinced we could blast off momentarily.

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