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As silver underwent a significant sell down the authorized market participants for the U.S. silver ETF evidently didn t even need to reduce the float or to sell a single ounce of silver. To the contrary. What that means is that the trading for SLV shares remained pretty much in buying/selling balance even during the harsh selling which occurred last week.

What it also means is that longer term very large holders who have bought into SLV for silver exposure didn t panic during last week s significant dip. They re evidently holding for now, which is no surprise given silver s ultra bullish long term fundamentals. Isn t it a little hard to believe a strong sell down if it doesn t include negative money flow from the biggest silver ETF?

Silver COT: Remember that the big surge down didn t really get underway until late Tuesday 3/18, the cutoff day for COT reporting and didn t even breach $19 until Wednesday, so COT data doesn t reflect conditions after the rifle shot lower. Silver actually peaked on the Monday before COT cutoff day intra day at $21.34 before very spirited profit taking clipped it back to a last trade of $20.23.

By COT reporting Tuesday selling pressure had overwhelmed latent buying pressure and the metal tested as low as $19.57 before a minor rally attempt failed and a Tuesday last trade of $19.682 (a scary one day swing lower of $1.66 peak to close). That s how we got to the closing price that last week s COT data relates to. Week on week the price looks flat, but that doesn t tell the very volatile story. On Tuesday the sell down was already underway for silver.

With that in mind, as silver traded near flat, up just $0.02 from COT reporting Tuesday to Tuesday (from $19.66 to $19.68) the large commercial COMEX silver traders (LCs) increased their collective net short positioning (LCNS) by a teensy 286 to 71,188 contracts of net short exposure. Not more than noise in the figures. Meanwhile the total open interest on the COMEX fell 1,621 to 160,860 COMEX 5,000 ounce contracts.

Interestingly, for the record both the commercial net short interest and the total COMEX open interest peaked on February 19, with silver then at $17.25. As the metal zoomed upwards another $4.00 or 23% over the following four weeks the commercial net short positions actually FELL from 75,790 to 71,188 contracts net short, a drop of 4,602 or about 6%. During the same four reporting week period the total COMEX open interest for silver also declined from 189,151 to 160,860 open 5,000 ounce contracts, a drop of 28,297 contracts or 15%.

What is interesting about that is that while the total open interest fell 15% the commercial net short positioning declined less than half of that percentage wise, so their actual net short position as a percentage of the total open interest increased a little. It increased a little, but not a lot.

If the large, well funded bullion banks and hedgers who dominate the commercial category on the COMEX engineered the most recent plunge in silver prices, then why didn t they take more advantage of it prior to the event?

One would think that if they had the stroke to determine when and how much of a pullback they were going to thrust into the market, they would have done a better job of positioning ahead of time.They not only didn t increase their net short positioning ahead of the hot money get out pullback, they were actually REDUCING their net short positioning ahead of it a little.

The data is pretty clear. If the commercials were responsible for the latest silver swoon then they should be embarrassed for not doing a better job of capitalizing on it. They should also be mortified that they allowed the market to nearly double in just seven months.