this is from gene arensberg's latest report, and his response to a question about gold and silver in the short term:

Last week we reported the lowest relative commercial net short positioning (LCNS:TO) since April 21, 2009 (11 months ago, then 44.1%) with gold then trading at $883.05. And we said that for whatever reasons, the largest commercial traders had strongly reduced their collective net short positioning on nearly flat gold last week, just as we suspected and had reported.

This week, we note the opposite condition, where the commercials seem to have regained their zeal to “hedge” gold and in a big way. We use the term “hedge” loosely because the CFTC does.

Notice that the increase in the commercial net short positioning for gold was larger than the increase in the total open interest on the COMEX.

Right or wrong, we have to view the very strong short selling by the largest hedgers as “proof” that they take exception to the idea of gold advancing above $1,134.41. As we write this gold has powered on even higher, to above $1,160.00, so their positioning has already been somewhat overrun.

...for the first time in several weeks the COMEX commercials have decided to get aggressive on the short side. It doesn't necessarily mean they are "right" but it does suggest they think they are. By the way, my friend Bill Haynes, who runs the well-respected CMI Gold and Silver bullion dealership based in Phoenix checked in a few minutes ago and reports that they are seeing "massive" liquidation on this price run up in his area. We agreed that usually, in the past, when we saw more selling by the public than buying it was a contrary bullish sign, for what it's worth.

http://treo.typepad.com/got_gold_report/2010/04/cot-flash-April-9-2010-.html