Welcome to illuminati silver, we tell you the truth about silver.
Today is Thursday 20th September 2018 and we are providing a brief but we hope useful
guide to the COT Report – what does it mean, how does it work and is it at all useful.
As this subject can become rather technical, and potentially laborious, we have split this
training into 2 parts. Part 1 which is this video =- which basically provides the definitions,
what the report looks like and an over all guide to what the various parts and aspects
of it means. Part 2 which will be published Saturday will
be how one can interpret the report, use it to make better and potentially more accurate
decisions and some of the factors to both avoid and to take advantage of.
A more detailed and thorough analysis of the COT report will be published within the Inner
Sanctum when it is launched on 1st November, however we are confident that for most people
what you learn here will be ample unless of course you are a day trader or wish to specialise
in the futures market. OK COT what does it stand for?
COT stands for Commitment of Traders Reports and is published by The Commodity Futures
Trading Commission (or CFTC) which enumerates the holdings of participants in various futures
markets in the United States. Specifically, the COT reports provide a breakdown
of each Tuesday’s open interest for futures and options on futures markets. The data is
gathered at the close of business on a Tuesday and is published on Friday afternoon.
There are four main reports: 1. Legacy
2. Supplemental 3. Disaggregated
4. Traders in Financial Futures We shall be looking at the disaggregated reports
which are broken down by; agriculture, petroleum and products, natural gas and products, electricity
and metals and other physical contracts. Naturally, we are more interested here in the metals
and especially gold and silver. All COT reports provide a breakdown of each
Tuesday’s open interest for markets in which 20 or more traders hold positions equal to
or above the reporting levels established by the CFTC. The reports are published in
futures only formats as well as futures -and-options combined formats. The data are available in
both short format and long format. We shall be looking at Futures only and short format
for this training presentation. This Report i.e. The Disaggregated COT was
first published on 4th September 2009 and increases transparency by separating traders
into the following 4 categories: 1. Producer/Merchant/Processor/User
2. Swap Dealers 3. Managed Money
4. Other Reportables So let’s discuss briefly what each of these
refer to, there are specific definitions for each of these but we shall summarise them
in order not to complicate matters: 1. Producer/Merchant/Processor/User:
Predominantly an entity that engages in the production, processing, packing or handling
of a physical commodity and uses the futures markets to manage hedge risks associated with
those activities. So a precious metal or silver Miner would fall into this category. What’s
important to note here, is that generally these people or organsiations use these markets
primarily as a hedge.
2. Swap Dealer: An entity which primarily deals in swaps for
a commodity and uses the futures market to manage or hedge risk associated with those
swap transactions. The swap dealers counterparty’s could involve hedgefunds or speculative traders
or even commercial clients who are managing risk associated with their dealings with the
physical commodity. 3. Money Manager:
For the purpose of this report, this is a registered commodity trading advisor (CTA),
a registered pool operator (CPO) or an unregistered fund identified by the CFTC. These traders
are engaged in managing and conducting organised futures trading on behalf of clients. Please
note – on behalf of clients.
4. Other Reportables: All other reportable traders who do not fall
into any of these 3 categories is placed in this category of ‘other reportables’ and
generally these tend to be the individual trader or small trading entities.
On the short form report – which we shall show later, the categories are divided into
3 subsets essentially: Namely: Commercials – which as far as gold and silver
is concerned are the banks and mining companies who understand the true supply and demand
of the asset and are trying to hedge against future price movements.
Non Commercials – are large speculators, often known as the ‘smart money’ who speculate
on the future movement of the trend in the underlying asset. They are simply looking
to profit from their trade – e.g. Hedge Funds, Traders and Speculators
Non Reportables – Basically private investors small in nature and which represent around
10% or less of the trade and are often known as ‘dumb money’ as around 80% of their
trades lose. So before we go on to look at a specific report
– we need to define what is meant by futures and open interest.
A futures contract is a derivative which gets its value from an underlying asset. They are
traded to either profit from future values of the asset or to hedge a position in the
asset against a drop in price. Open Interest differs from volume in that
volume is the number of contracts actually traded per day, while open interest is the
number of contracts entered into, either long or short, that have not been offset by transactions
or exercised. They are new or open contracts which may offer cluesas to what the traders
are anticipating price to do in the asset. i.e. the contract is still open.
Now briefly we shall show you a report highlighting these different categories and on Saturday
we shall being up the latest COT report which will be published tomorrow and run through
it with you to highlight some tips and hopefully identify some trends. So
please watch out for our next video which will be published on Saturday.
We hope you have found this video interesting and informative and if so, please give it
a thumbs up and share it on twitter. Please ensure that you have subscribed to our channel
and pressed the bell sign so that you are notified of any future videos. Also kindly
visit our website at illuminatisilver.com and if you haven’t already done so please
subscribe as a free member for regular email updates and offers.
Disclaimer: Illuminati Silver owners come from a background
of Banking, International Wealth Management and Economics. Having now retired from these
worlds we are not qualified to give investment advice. Therefore, this and other productions
must not be deemed to be giving such advice and merely represent the personal views of
its owners.