Here are some charts I made from Commitment of Traders (COT) data I downloaded from the CFTC along with price data on gold and silver. They give some idea as to how over extended the gold & silver shorts currently are.

The first two charts are plots for the cumulative long - short positions for gold and silver commercials along with the gold and silver prices.

The blue line's construction is identical to an A-D line for the NYSE. From 10 Feb 1986, I subtracted the shorts from the longs positions to come up with the net long - short figure, I have done this for each reporting period listed by the CFTC for the gold and silver commercials.

This figure is added to every other week's net long - short figure to create a cumulative net long - short line. The numbers on the left Y axis are in millions. These numbers are not open interest.

Creating a cumulative long - short line allows us to see when the commercials are going net long or short and when they change their trading patterns.

I have done this for several other commodities. With out a doubt it is a truism that commercials almost always oppose the price trend. They short the market when the price goes higher and go long when the price goes down. In this respect the gold commercials are acting true to form for commercials traders and so at face value there is nothing out of place here.

But where their trading pattern becomes questionable is the gold commercials dogged determination to oppose these large price changes for multiple years. To my knowledge, no other commercial traders have done this.

Here is the silver commercials chart. Note that the silver commercials have never reported a net long position since 1986! Silver goes up in price they short more, silver goes down in price they short more. For 20 years they have maintained a net short position with each of their 866 reports submitted to the CFTC. The silver commercial's trading practices are uniquely their own.

I have taken the above data and come up with what I call an estimated profit or loss line. I really don't know what their capital accounts look like. However logic tells me that if the commercials report to the CFTC a net long on Tuesday's close, and the price of their commodity has risen by the Friday's close, they most likely booked a profit. I am also assuming that if the price had gone down, they most likely have booked a loss.

Using this logic I came up with the following plot on how the gold and silver commercials are probably doing trading gold and silver at the COMEX.

Clearly the gold commercials are going ever shorter as the price of gold goes ever higher. They are trying to break gold's uptrend but so far are not having much luck at it. Their loses must be in the hundreds of millions or even in the billions of dollars as we speak.

We can see below that the silver commercials are in much the same circumstances.

Note that with this estimated profit or loss plot I haven't assigned a dollar value to it as I only have position data for the Tuesday's close and price data for the next Friday's close. To assign a dollar value would give my plots more precision than I think they actually have. Still what they do provide is a standard methodology that spans the past 20 years with which we can measure the gold and silver commercials performance today.

They are not doing too good.

That the commercial traders would be so wrong, for so long, and losing so much money for their trading accounts is a point in favor of GATA contentions of market manipulations for gold and silver.

It will be very interesting to see just how much higher the prices of gold and silver have to go before the gold and silver commercials are forced cover their short positions and go net long. This technique will show exactly when they do that.

At that point the commercials will stop being a brake on gold and silver prices and actually provide a significant tailwind for the precious metals to soar higher. This is assuming that the commercials don't have a special surprise planned for their COMEX counterparties. Allowing commercials to force unfavorable terms upon their counterparties when market events fall outside of acceptable parameters is not unheard of in the commodity world.