Remember Vultures, we expect that there will be significant resistance by the largest sellers of silver futures as silver nears its former resistance in the $19.50 - $19.80 area – as we mentioned in the special Sunday update below on the web log.

Those who might have been hoping for a massive short squeeze in the COMEX silver pits caused by futures traders standing for delivery will have to wait for another time. As of Monday the open interest for the September contract has fallen from over 13,000 to a more “manageable” 3,002 contracts (roughly 15 million ounces) that will potentially stand for delivery.

As much as we all expect silver to eventually defeat its long-time resistance, we cannot and should not expect it to come “easily” the first attempt to do so. That’s not to say that silver cannot surprise everyone with a major blast higher, it can and it might. But what we are saying is not to expect a silver rocket launch without a COMEX street fight first.

In last week’s disaggregated COT report the more mercenary of the COMEX commercial traders, the traders the CFTC classes as Swap Dealers, had actually turned slightly net long silver with silver in the $18.30s.

Source CFTC for disaggregated COT data, cash market for silver.

From August 17 to August 24 the SDs covered or offset 3,329 short positions turning from 2,134 contracts net short to 1,195 contracts net long. Of course since then silver has rallied more than a buck, and both the swap dealers and the producer/merchants had ample ammunition to fire from their pre-Labor Day-holiday bunkers.

We have to presume the largest sellers of silver futures are not yet overawed by the buying pressure they are encountering while liquidity is light and a good many of the largest players are “on holiday leave” already.

It will take buying pressure and lots of it for silver to well and truly challenge the long-time resistance. While we do indeed expect that buying pressure to surface at some point, it would be a surprise of the first order if it were to occur prior to the upcoming holiday.

Having said that, we here at Got Gold Report believe that silver is gaining popularity once again and is overdue for a new definition move to the upside.

Just for the record, we like upside surprises when we are long something, and should one occur, we’ll be adding to the new silver position as we mentioned previously. The “fun” part for all us on the long side will come once the Big Sellers understand that resistance has given way.

That’s when the Big Sellers actually become reluctant buyers for a brief, but glorious time as they retreat to a more defensible position.

Silver remains on breakout watch for now.

On another note, we have reached the time when our full reports will be available to paying subscribers only. We will have more details about that in the near future. The Got Gold Report Blog will always remain free of charge, but our more in-depth and time sensitive analysis will be directed to our Vulture membership more and more over the next little while.

Special thanks to all who have already signed up with us. You make this service possible. Those interested in joining us will find the subscription information at the upper-right of the web log.

That is all for now, but there is more to come.