May-24 CMX silver (SIK4): $24.34 (Mar 8), +8.6% from $22.41 (Feb 28)
March 11, 2024
Key Observations:
Last week gold and bitcoin each surged to new all-time highs in their nominal prices.
GC1 kissed $2203 per oz on Fri. Mar 8, for an advance of +11% from its recent low on St. Valentine's Day. Likewise, bitcoin surpassed the $70K price level for the first time ever on Fri. Mar 8. That price was trading closer to $40K when Chair Powell made an infamous pivot on Dec. 13, 2023.
But long before there was solana (+45% between Feb 23 and Mar 8 closes), there was silver. And what catches our eye in its paper market, especially ahead of the U.S. CPI report to be released on Tue. Mar 12, is the latest move in the net position of institutional investors in CMX futures and options.
For the six weeks prior to last, investors were clearly confused and aimless. Net positions, collectively, bounced between +25M ounces long and –50M ounces short in a decidedly sawtooth pattern that communicated aggressive confidence to absolutely no one.
That meandering walk changed last week. Hedge funds took long gross risk from the 24th percentile since Oct. 2006 to the 43rd. Yet, short gross risk has dropped from 80th to only the 60th percentile. We spotlight this as a potential catalyst for more price gains if ~20 million ounces of shortcovering get to the 50th percentile.
Source: CFTC, Blacklight Research. Note: latest data are for 5-Mar-2024, reported on 8-Mar-2024. Gross risk is 429 million ounces, which is a 45th percentile rank since October 2006. The 253 million ounces of gross risk held long is the largest since Nov. 28, 2023 (278 million ounces). Current short risk, at 176 million ounces, is comparable to where it was on Dec. 12, 2023 and is about 35 million ounces larger than the risk position coming into 2024. Short risk could swiftly shed 20-35 million ounces.
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