once again, gene arensberg says the big commercial short position has been declining:

The price of silver has been exploding higher but the relative commercial net short position is falling! We have added trend lines to the graph which help to confirm that over the past year the propensity of the Big Sellers to take the short side of silver has been falling as the price of silver has been rising and that is completely contrary to the historic COT action in our database. Again SOMETHING HAS CHANGED.

This is about as interesting an intriguing as the COT world gets. We are witnessing a major change in the silver market. We believe it is indicating that the usual sellers are likely unsure of their ability to source enough silver to avoid a short squeeze and thus are unwilling to chance being “caught short.”

We believe that the primary reason the Big Sellers have not been willing to sell into this silver definition move higher is that they see exploding demand for the limited supplies of available commercial silver bar stock.

We believe that if that was not the case, if the commercials believed there was ample bar silver available they would have ramped up their “opposition” to the Silver Express well before now, like they did in the previous two DM examples above, confident that sooner or later silver would harshly correct enough later to make their position-taking profitable. Instead, they are not only not selling into the historic rise in price, they are strangely “getting smaller,” both nominally and in relative terms.

So, friends, we are witnessing a very unusual event in the tiny COT universe of silver futures. Very few people in the world are aware of the conditions we just related to all of you. Most will assume that silver has been over-priced by crazy hyped-up speculators throwing enormous sums of capital at silver and that, they will conclude, is unsustainable.

In fact, the current situation does include hugely increasing demand which is inarguable, but we Vultures know that the reason that silver has gone nearly parabolic is not just because of the demand – it is also because the “price police” have been in retreat.

Funds and individuals sense that silver is on a rise, but they may not understand just how structurally bullish the market is, yet. We cannot know if this is The Event, or merely a warm up or a warning shot, but either way our desire to own and to hold physical silver and silver ETFs is certainly enhanced by this data.

http://www.gotgoldreport.com/2010/11/sunday-ggr-now-public.html