In the COT for positions held as of 7/15, both the gold and silver net commercial positions climbed to levels not seen since the extreme high prices of March. In the past three weeks, the gold commercials added 60,000 contracts, increasing their net short position to more than 246,000 contracts (24.6 million ounces), one of the largest COMEX net short positions in history. In the past week, the smaller gold commercials (the raptors) joined in the short-selling spree, accounting for 16,000 of the 18,000 net short positions added.

In silver, the selling by the commercials was virtually all of the concentrated variety, for the past week and the past 3 weeks. The eight largest traders in COMEX silver futures now hold more than 76,000 contracts net short, or an astounding 380 million ounces. That’s more than 211 days of world mine production, almost double the equivalent figure for gold (the next most concentrated short position). By way of comparison, the concentrated net positions of the 8 largest traders in Nymex crude oil futures, are the equivalent of less than 3 days on the long side and 2 days on the short side in terms of daily world production.

If you add to the documented concentrated net short position of COMEX silver futures, the suspected naked net short position in the shares of the big silver ETF, SLV, it is easy to imagine the motivation of the big concentrated shorts to engineer a sharp sell-off in silver and gold prices. It’s also easy to imagine the shorts losing control considering the growing tightness and shortage developing in the physical silver market. Whether we get a sharp sell-off or a explosion to the upside, it should be clear to everyone in advance why either occurred.