The COT figures for last Tuesday showed that the Swaps’ (mainly bullion bank trading desks) net short position had deteriorated by 846 contracts. And the Managed Money category had reduced its net long exposure by 3,424 contracts. But these reductions had fed mostly into the Other and Non-Reportable categories, which rose to a combined record net long 47,189 contracts. The chart is below:
The problem for the Swaps is that these categories are buying futures with a view to taking delivery. In other words, they are not acting like normal speculators, vulnerable to being shaken out of long positions the way hedge fund traders can be spooked. It is a “reserve of illiquidity” which is difficult for Swaps to unlock. The next chart is of the Swaps’ net shorts, confirming their deteriorating position:
