At the start of September, banks’ gross short futures positions equaled 55.5% of COMEX gold open interest and 49.5% of COMEX silver open interest.
Those are large shares. The September 1 Bank Participation Report shows 230,503 short contracts against 27,569 longs in gold. In silver, it shows 51,703 shorts against 16,243 longs. Bank shorts substantially exceeded bank longs in both metals.
The bank short share rose in silver from 42.5% to 49.5%, while it fell in gold from 59.6% to 55.5%. Gold still had the higher share at the September reporting date, but the two markets were moving in different directions beneath those headline figures.
There is a useful detail in the gold numbers. Banks held more short contracts than they had a month earlier, yet their share of open interest fell. Total gold open interest grew faster than the banks’ short position. In silver, bank shorts increased while total open interest declined, pushing the banks’ share higher.
That is why we watch their share of the market alongside the number of contracts. When bank shorts rise, we also want to know what happened to open interest. The same increase in contracts looks different in an expanding market than in one where open positions are shrinking.
Gold and silver stand out among the metals in this report for the size of banks’ gross short exposure. Their positions are worth watching.
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