We will not cover the silver price chart in this article. We have done so countless times recently. It also is not our silver forecast, not is it the flash crash that ‘suddenly’ ‘happened’ on a Sunday night, on August 8th. However, what looks to be THE most insightful from 2021, not only out of the silver market but out of any market globally, is the way open interest developed after the flash crash of 08/08.
Below is the silver CoT report
The red bars on below chart represent net positions of the largest market participants. You should think of this chart as a ‘stretch indicator’: if those positions (red/blue bars) get extremely high we can expect a big retracement. The opposite is true as well.
Right now the red bars are at the lowest point in years, and the last time they hit current readings around 24 it ‘coincided’ with the start of this monster silver rally in June/July last year.
There is an even more interesting conclusion from the above chart: open interest, in green, in the lower pane, increased since Tuesday 08/10/2021 (which was the cut off date of this report).
So silver sold off on Sunday night, 08/08/2021, in the futures market. And ‘at the same time’ open interest in silver (futures market) did rise.
The way we understand this: some really big and influential market participants added big numbers of futures contracts, in the silver futures market.
Interesting, very interesting. Especially because if we listen to our members and followers we see that some (not all) are nervous about the silver market. Some (not all) are losing their patience. We can imagine quite some retail investors were really scared after the flash crash.
Interestingly, at the same time, in the futures market, some others are heavily adding futures contracts.
You must know what this means. We won’t explain. We shouldn’t explain. It’s blatantly clear.
We stay long silver miners even though we ‘swapped’ one of our favorite silver mining positions for a quick trade, aiming to raise capital and buy more of our favorite silver miner(s) in one or two weeks from now. You can follow our work (more in-depth silver insights), our trades, our portfolio by signing up for Momentum Investing >>