Key Takeaways
- 1The CFTC publishes weekly Commitment of Traders (COT) reports showing silver futures positioning.
- 2Commercial traders (banks, dealers) typically hold large short positions in silver - often 4+ months of global production.
- 3A small number of banks hold a concentrated portion of total silver short positions.
- 4Large short positions must eventually be covered, potentially fueling price spikes.
- 5The 2021 "silver squeeze" attempt targeted these concentrated short positions.
- 6When commercial shorts are near extreme levels, silver prices often rally as positions unwind.
- 7Tracking COT data helps identify potential squeeze conditions before they occur.
Every week, the Commodity Futures Trading Commission (CFTC) publishes data showing who holds what positions in silver futures. This data reveals something remarkable: a small number of large traders hold enormous short positions in silver, often equivalent to months of global production.
These concentrated short positions have been a source of controversy for decades. Critics argue they suppress silver prices below fair value. Defenders claim they represent legitimate hedging. Whatever the truth, understanding this data gives investors insight into potential price movements.
In this guide, we'll break down how to read CFTC data, what it reveals about silver positioning, and what happens when these shorts eventually need to cover.
CFTC Commitment of Traders Reports
The CFTC requires large futures traders to report their positions. This data is compiled into the weekly Commitment of Traders (COT) report, published every Friday at 3:30 PM ET (reflecting positions from the prior Tuesday).
COT Report Categories
Commercial Traders
Producers, merchants, processors, and swap dealers. These are the "big boys" - banks and large institutions. They typically hold the largest short positions.
Non-Commercial (Managed Money)
Hedge funds, CTAs, and other speculators. They tend to follow trends and are often net long when prices rise.
Non-Reportable
Small traders below reporting thresholds. Typically retail traders with minimal market impact.
There are actually two versions of the COT report. The Legacy report is simpler, while the Disaggregated report provides more detail. For silver analysis, most analysts focus on the Legacy report's Commercial category.
Commercial Short Positions
The Commercial category in silver is consistently net short—meaning they've sold more contracts than they've bought. These short positions are often staggering in size:
To put this in perspective: commercial shorts often represent 4-6 months of total global silver mine production. No other commodity has such concentrated short positioning relative to its market size.
The Concentration Problem
Bank Positions in Silver
The CFTC also publishes a Bank Participation Report monthly, showing positions held by US and foreign banks. This data has revealed controversial patterns:
- Dominant short holders: A handful of US banks consistently hold the majority of commercial short positions
- Historical concentration: In the past, JP Morgan was identified as holding over 40% of COMEX silver shorts
- Regulatory attention: The CFTC has investigated silver market concentration multiple times
- Position limits: Regulators have proposed but struggled to implement position limits in silver
Why Do Banks Hold These Shorts?
The Official Story (Hedging)
Banks claim shorts offset long positions in physical silver, client OTC exposure, or ETF hedging. They're supposedly market-neutral.
The Critic's View (Manipulation)
Critics argue shorts exceed hedging needs and are used to suppress prices, benefiting short sellers at investors' expense. The concentration makes manipulation easier.
Regardless of intent, the effect of large concentrated shorts is to cap upside price movement. When prices rise, shorts can add more contracts to push prices back down—until they can't.
Position for Potential Squeeze Conditions
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Get Your Free MatchShort Squeeze Potential
A short squeeze occurs when rising prices force short sellers to buy back their positions, which pushes prices even higher, forcing more buying in a feedback loop. The conditions for a silver short squeeze include:
Large Concentrated Shorts
Check. Commercial shorts are massive and concentrated among few traders. These positions MUST eventually be covered.
Physical Tightness
Check. COMEX inventory depleting, supply deficit growing. If physical isn't available to deliver, shorts have nowhere to hide.
Catalyst for Price Rise
Pending. Could be industrial demand spike, investment surge, currency crisis, or loss of confidence in paper silver.
Momentum Traders Pile In
The final stage. When managed money goes aggressively long as commercials cover, the feedback loop begins.
The 2021 Silver Squeeze Attempt
Related reading: COMEX Inventory Tracking and Silver Supply Deficit
How to Track COT Data
You can track CFTC data yourself through several sources:
- CFTC website: Official source at cftc.gov/MarketReports/CommitmentsofTraders
- Trading websites: Many sites chart COT data (TradingView, Barchart, etc.)
- Specialized analyzers: Sites like COTbase.com make the data more accessible
- Newsletter services: Many precious metals analysts publish weekly COT analysis
Key Metrics to Watch
Trading Signal
Current Market Positioning
As of early 2026, silver futures positioning shows:
- Commercial net short: Remains elevated at 300-350 million ounces equivalent
- Concentration: 4 largest shorts hold approximately 45% of commercial short position
- Managed money: Moderately long, not at extreme levels
- Open interest: Total contracts have increased, reflecting growing market interest
The combination of large commercial shorts, declining COMEX inventory, and structural supply deficit creates an increasingly unstable situation. Something will eventually give—either shorts cover (prices rise), or physical silver materializes to meet demand (unlikely given production constraints).
Further analysis: Silver Backwardation Explained and Is Silver Undervalued?
Frequently Asked Questions
What is silver short interest?
Silver short interest refers to the number of silver futures contracts sold short—bets that silver prices will fall. The CFTC tracks these positions in weekly Commitment of Traders reports. Large short positions in silver are typically held by commercial traders (banks and dealers) as part of hedging or market-making activities.
Why do banks hold large silver short positions?
Banks claim to hold short positions as hedges for long physical positions or client exposure. However, critics argue these shorts exceed legitimate hedging needs and suppress silver prices. The concentration of shorts among a few large banks has drawn regulatory scrutiny.
What is a silver short squeeze?
A short squeeze occurs when rising prices force short sellers to buy back (cover) their positions, which pushes prices even higher, forcing more covering in a feedback loop. Given the concentrated short positions in silver, a squeeze could cause dramatic price spikes.
How do I read CFTC Commitment of Traders reports?
The COT report breaks positions into categories: Commercial (producers, merchants, dealers), Non-Commercial (managed money, speculators), and Non-Reportable (small traders). Watch the Commercial net position (longs minus shorts) and compare to historical extremes. Extreme short positions often precede price rallies.
Can silver short positions cause a market crash?
Concentrated short positions create systemic risk. If shorts cannot be covered due to physical shortage (like COMEX inventory depletion), it could cause disorderly markets, potential delivery failures, and a disconnect between paper and physical prices. This risk increases as the supply deficit continues.
Own Silver That Can't Be Shorted
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Thomas Richardson
Former wealth manager turned Gold IRA researcher. After 20 years in finance, I got tired of watching scammers prey on retirees. Now I investigate companies and publish what I find—good or bad.