The latest gold and silver COTs and Hedgers charts are quite simply astounding – we have not see anything like it since the site started 15 years ago. In addition, short selling of gold and silver by futures traders is at record levels by a huge margin at a time when bullishness towards the dollar is also at extreme levels. All of this points not just to a reversal soon, but to a meltup in gold and silver triggered by a scramble to exit massive short positions once the tide turns.

We are going to concentrate on silver in this update, because that is where we see the most extreme positions on the COT and Hedgers charts. Starting with the 6-month chart for silver, we see that just going on the silver price chart alone, it still looks awful, with the price breaking down into another downleg last week within the downtrend shown. This downtrend will continue until it doesn’t and while that doesn’t sound very helpful, we can be perfectly clear about the two things to look out for as a signal of a reversal – one is a clear breakout from the downtrend on strong volume, the other is the appearance of a big white reversal candle, again on strong volume, regardless of whether this candle breaks it out of the downtrend or not. Latest COTs and Hedgers charts indicate a high probability of either of these technical developments occurring soon.

The latest silver COT chart is the most bullish we have seen in the 15 years the site has been in existence. Until the past 2 weeks we never saw the Commercials net long silver, yet last week they added to long positions to the extent that they are now significant, and "even more significant given that the Large Specs now have sizeable short positions, and they are always wrong".