Silver Futures CoT 2

After rocketing 76% higher in just 5 months, silver continues to enthrall investors and speculators. In the decade I've been gaming its bull through actively trading silver stocks, I've never seen this metal so popular. As more traders discover silver and start following and trading it, I've heard a lot of questions on a recent development in the silver-futures market. Its open interest recently declined sharply.

Specializing in stock trading myself, I don't delve into the futures world very often. I haven't written about silver futures since 2005. Mostly this is because years of research, study, and trading experience have shown me that silver futures usually aren't particularly relevant to silver price action. Silver's primary driver is actually the price of gold, so if you want to trade the silver complex successfully watching gold is the key.

Not only does silver-futures action fail to help me profitably trade silver stocks, it has long been ground zero for conspiracy theorists. While not as prevalent today, back in the early 2000s some newsletter writers made a cottage industry out of promoting endless silver conspiracy theories. I witnessed countless traders get bogged down in and derailed by this contradictory and ever-changing mythology. The end result was often deep paranoia that crowded out rationality, crippling their ability to profitably trade silver.

The modus operandi of the most-prolific silver conspiracy theorists was similar. They spent endless hours analyzing and attempting to draw conclusions from an arcane government report. Since this report is so technical and difficult for laymen to understand, they acted like high priests ferreting out its secrets. Their assertions started with facts from the report, but ended with opinions. Their followers eagerly hung on every word, trying to expose the vast conspiracy that prevented them from getting rich in silver overnight. (more)