Butler: Improvement in Silver Commitment of Traders "Spectacular"

"One thing that I hope everyone realizes is that we have not declined in gold or silver prices for any reason other than to enable the commercial controllers on the COMEX the opportunity to buy as many gold and silver contracts as possible. The data indicate that these commercials are doing just that, in spades."

"In watching the daily price action I have been muttering many things to myself, not the least of which has been the phrase, "slicing the salami." That's the term that my good friend and mentor Izzy and I have used to each other over the years to describe one of the commercials' favorite tricks against the technical funds. It involves the deliberate setting of a series of new price lows to lure the technical speculators into selling (both long liquidation and new short selling). Nothing encourages technical selling more than the establishment of a series of new price lows (or buying into new price highs). It's like waving a red flag in front of a bull. Once this process is complete, you are invariably left with an important price bottom. I haven't talked with Izzy lately, but I'm sure he would agree that the commercials sliced the salami recently in silver and gold like never before."

"The changes in this week's COT report for gold and silver were spectacular, as they should have been given the price action. If you have to endure the financial pain from the endless slicing of the salami, the reward should be a commensurate improvement in the market structure. While I can't say I'm surprised at this week's COT readings, I am also relieved because last week's strange movements by the silver raptors still have me scratching my head. And it goes without saying that given the dramatic price weakness since the cut-off on Tuesday, that were the COT to be calculated as of Friday's close, there would be further significant improvement in both gold and silver."