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Message: tech funds in silver cleaned out

tech funds in silver cleaned out

posted on Mar 05, 2009 03:15PM

this is from ed steer of casey research:

Gold didn't do a whole heck of a lot in the Far East yesterday. A smallish rally into the London a.m. fix [5:30 a.m. in N.Y.] got smacked, but managed to gain that back and a bit more by 9:00 a.m. on the Comex in New York. Then the usual not-for-profit seller[s] showed up, and that was it for the day. The low came in after-hours electronic trading...shortly after the Comex trading pits closed. After that, it managed to tack on a few bucks before Globex trading closed in New York at 5:15 p.m. Volume was so-so. Only 99,266 contracts were estimated to have traded, including a switch effect of 8,734 contracts.

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Silver's action yesterday was similar to gold's...with the exception that the 'low' for yesterday [such as it was] occurred in early morning trading in Hong Kong...not in New York. However, silver's London rally ran into the same Comex brick wall as gold, and at precisely the same time...9:00 a.m. in New York.

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Despite the fact that both gold and silver got it in the neck on Tuesday, open interest numbers for that day's trading were underwhelming. Gold open interest only fell 2,071 contracts to 365,271...and silver's o.i actually rose 15 contracts to 93,051. Hopefully these figures will be in the Commitment of Traders tomorrow. In another long conversation with Ted Butler, he feels that the tech funds in silver have pretty much been cleaned out...even though the price didn't get anywhere near the 50-day moving average...and that gold had a long way to go to achieve the same position that silver is now in. Yesterday's low in gold for the April contract was $900.40...with the 50-day m.a. at $895.93...less than five bucks away. The gold price would have to be dropped to about $880-885 [or a bit lower] to clean out the majority of the tech longs in the Non-Commercial category. Will that happen? One way or another, it's my bet that we'll find out what JPMorgan et al have in store for us sometime during the next 48 hours.


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