Open interest continued to expand, this week by 36,290 contracts. Producers/consumers increased long positions by 4,650, short positions by 1,275. Managed money reduced long positions by 1,676 and increased shorts by a minimal 407. Non reportable traders increased long positions by 3,775, shorts by a sizeable 9,015. While gold charts look parabolic, positioning is not indicative of rampantly bullish sentiment. Regardless, at these levels, picking a direction is a short term/day trading game. Given willingness of non reportable traders to short into this move, a blow off move that shakes out shorts would not be surprising. Interestingly, the futures-spot basis (front month futures price minus spot price) is negative rather than the typical premium over spot. This is a bit unusual, as the mean over the past year is 1.6 and generally does not stay negative for very long.
Silver
Open interest rose modestly, by 5,499 contracts. Producers/consumers reduced long and short positions, both by about 1,700. Managed money increased long positions by 5,045, reducing short positions only slightly, by 523. Non reportable traders reduced long positions by 1,950, increased short positions by 2,299. None of these changes are particularly significant. After breaking above 18.00, next resistance is 19.00-19.50. It is unlikely for silver to move above 19.00 and hold that level.
Copper
Open interest increased by 7,778. Producers/consumers increased long and short positions by 1,221 and 4,067 respectively. Managed money increased long positions by 6,259, shorts by 3,826. Non reportable traders reduced long and short positions by 1,950 and 903 respectively. After clearing the 2.93 – 3.05 range, prices consolidated around the 3.10 level. Next resistance is 3.250 and we believe it will be difficult to clear over the next week to two weeks.
