Tuesday, 4 October 2011

When big banks like gold more than silver?

(Click on the chart to enlarge, the vertical axis is percentage of gold and silver futures markets) Sad hours plugging numbers into excel that probably don't mean anything. This chart takes data from the US futures market regulator's weekly report on the positions held by the largest traders in the gold and silver futures market. (Commitment of Traders report)

In the red it's the net short postions of the 8 largest traders in the gold (dotted red line) and silver (solid red line) futures markets. This measures how much of these metals banks/commodity traders are selling. This is measured as a percentage of the market (CFTC explanation) from the part of the report that measures trader concentration. Both the dotted lines represent gold, both the solid lines represent silver.

When the solid lines are above the dotted lines the banks are selling larger portions of the gold market than the silver market. The latest data shows that the biggest traders/banks on the markets have dropped their gold shorts and built up their silver shorts to such an extent that the relative market shares in the silver and gold futures markets have changed. This probably means nothing as the two markets are separate. If it does mean something I don't know what it is.

The big black arrow points to July 2009. That was the last time that the biggest 8 traders swapped their relative market shares in gold and silver. So, in July 2009 the eight biggest banks/traders were selling about 55% of futures contracts in the gold and silver markets but with the gold short positions falling and the silver shorts rising.