RE Interview: LFTV Ep 153 (Dec 13/23) - Incorrect COT Statement ?

[cc_consulting]

Hello, I am repeating my question posted previously that has not yet been addressed either here on in the subsequent LTV Interviews :

Dear Andrew,
I disagree respectfully with your comment made around 34:39: 'the cot could not hide the Producer & Merchant category that they had net long footprints'. This is clearly incorrect when examining the Disaggregate Futures report (fut_disagg_xls_2023). It shows they were short on the Dec 12/23 report (which is what I believe is being referred to in the interview). As an aside, this Disagg futures COT report shows that P/M'S have been net short on every report for the entire 2023 year.
Eg:
Report Date OI P/M Long P/M Short P/M Net

12-12-2023 134281 4311 38849 -89009
12-5-2023 139753 4714 41340 -94488
11-28-2023 139144 3472 40323 -93886

Can you pls explain where your data comes from to make the comment 'P/M's have net long footprints'.

Thanks, Warren/Winnipeg Manitoba Canada

 

[cc_consulting]

yeah I've actually found Andrew saying this twice. I've tweeted both time here in this forum for an answer. I find it very hard to believe he would mislead with false information. I would just like an explanation of the data he is basing his comments that P/M are short when they are long per the disagg. COT report. I suspect he's looking at the LBMA data and calling that COT data (maybe it is a COT data that we can't see)..

 

[Lozion]

A good Question for Vaultside..

 

[cc_consulting]

Thanks Lozion.

 

[sixgun]

I will put a question into the mix about this. @cc_consulting - do you want to suggest something?

It does sound a bit back-to-front - Producer / Merchant are net short and their short positions increase and yet Andrew Maguire calls this long footprints.

We must remember that Andrew Maguire follows both the COMEX and the London physical markets. The average commentator is 'glued to a dot on a screen'. They have no visibility into the physical markets and even less interested.

The Producer / Merchant category is generally seen as the miners, refiners, industrial consumers, wholesalers, maybe some larger retailers. They actually deal in physical metal and to give them price stability they hedge in the futures market - this is how the futures market originally started for farmers and buyers of farm produce. If the Producer / Merchants are short in the futures market, you can likely guess they are long physical metal elsewhere. They are not gamblers going naked short. They don't want to wake up one morning to find the price of metal has tumbled and their stock is suddenly worth $millions less. It would damage their business. They need insurance, which is what the futures market can be used for. If their short position on the COMEX is increasing then they are building up physical stock levels elsewhere and are acting to hedge those positions.

I agree this is a good point to raise - so yes a question should go into the vaultside chat / LFTV question list so it can be clarified.

 

[sixgun]

Ah now i see we are on the LFTV thread - i get lost sometimes.
@ctharvey - will you pass this through to Patrick Turner or whoever is in charge so this loose end gets tied off please.

 

[Uchiki]

I don't follow this stuff, so I'm coming at this cold, but will add a few comments.

This is what I get back from the following search:
who are the Producer Merchant category of the gold cot



This backs up sixgun's description of these traders above.
I haven't looked at any historical charts to validate this, but my guess is that these guys are likely always net short in the futures market.

If they reduce their net short from one week to another, then there's a net long difference between the two weeks.
The answer may be in your post.

12-12-2023 134281 4311 38849 -89009
12-5-2023 139753 4714 41340 -94488

A reduction of ~5k in their net short between 5th and 12th Dec in % terms is quite a big move.

If their physical position happened to have been more or less stable between these two dates, then the reduction in their net short would have indicated that they were prepared to take on more price exposure on their physical holdings (felt that there was less need for hedging).

 

[Jeff W]

yeah I've actually found Andrew saying this twice. I've tweeted both time here in this forum for an answer. I find it very hard to believe he would mislead with false information. I would just like an explanation of the data he is basing his comments that P/M are short when they are long per the disagg. COT report. I suspect he's looking at the LBMA data and calling that COT data (maybe it is a COT data that we can't see)..

I think Andrew is trying to specifically answer your question in this week’s LFTV (from my perspective)!



Listen from 42:25 ~

Andrew:

“When you look at the COT reports, for example… this is fascinating stuff to me. You see the COT report, and it’s specifically talking about gold here… and you see… oh look, there’s an imbedded net-short position that the swap dealers have, or the producer merchants have… and then, when you realize, hold on a minute, because each and every… this is just the short hedging leg of a long, physical position. And, yes, they game it. Yes, they can game the CTAs into a range because of it… but essentially, what we’re looking at is just half the picture. The other half is a physical position that is actually forced to be in place when Basel… this is when Basel 3 legislation was… before it was enacted in November of 2022. It was exactly the point and the BIS covered all of their 500 tons of historical gold swaps to zero. And, yes, there’s been a bit of adding back, but it’s primarily, what we believe is the Fed, is (using) is actually, literally leasing gold into the BIS… but, really they’re out.. every CB… I guess the point I’m trying to make… every CB except the US is long gold… is positioned for a higher price in gold… the Fed is still betting against gold because it’s trying for its hegemonic reasons to protect the dollar.”

 

[cc_consulting]

Jeff, yes thanks I re-listened to 153 and came to the same conclusion.

 

[cc_consulting]

Thanks Sixgun,
If you want to pass along my original question above that would be fine. I did a bit more work , relistened to LFTV 151 & 153 and came out with , I hate to say it longer version , and a second question (which is an aside and need not be addressed) below. I put this all in a separate post next.

 

[cc_consulting]

Again thanks SIxgun.
I re-listened to both LFTV 151 & 153 improved upon the original question. I stumbled upon another item in 153 concerning the number of hidden contracts in the GOLD Swap category via the OTC market. I'll include it as Q2 as FYI only, but please ignore for now. I may address this in a separate thread.

LFTV 151:
I will withdraw my question on 151 because
Andrew talks about Options I did not look at options. I also agree with
his comment that Large Specs (4 * 8 largest traders) were net short, the data aclearly
shows this, etc.

Q1:
LFTV 153:
But I believe I still have a valid question on LFTV 153.

153 was cut on Dec 13/23, I don't know when it was recorded. But clearly Andrew refers to the
Dec 5/23 COT. I will switch my question to use Gold data as Shane does not specify ~33:33
silver of gold, but gold is more relevant, is Basel 3 backed, I assume that is their main topic.
fut_disagg_xls_2023 Gold COT:
P/M:
Report Date OI P/M Long P/M Short P/M Net
12-5-2023 487469 12631 62325 -49694

Transcript :
34:39
week the report captured the two-way rinse of the ctas. But interestingly the
34:44
producer Merchant category that actually involves producers in the they couldn't hide
34:51
their long Footprints in that report all right now Andrew earlier on you had

So the P/M data shows net short -49694 and Andrew's comment that
P/M are Long is in opposition to this. Can this be explained ?

----------------------------------------------------------------------------
Q2:
This is really an aside question and does not need to be addressed because
it may just confuse the main question above, but I thought I would include it here anyway.

Summary:
After re-listening to 153 I came away wondering if Swaps @ -177k on the COT could possibly be hidden in
their OTC Long position (ie because 177k is HUGE).

Transcript:
34:17 official agent banks are deliberately being presented as bearish

Around this time Andrew explains how useless the COT is, and that the Agent Banks (ie Swaps)
are incorrectly showing as net Short in this COT category but are actually net long via their trading in the
hidden Gold OTC market.

Q:
fut_disagg_xls_2023 GOLD COT SWAP Data:
Report Date Swap Long Swap Short Swap Net
12-5-2023 76376 253627 -177251

Can Swaps possibly be >177k IN THE OTC market (ie >177k is on hellofalot of contracts to be long).