Silver Commercials have only rarely moved net long in the history I track, and the 2018, 2019 and 2022 cases aligned with major lows. The current precious-metals complex, however, is showing a larger-than-average bearish extreme.
A rare silver signal that stood out from the full history
One of the clearest COT signals I have seen in precious metals came from silver in 2018.
Commercials in silver are normally net short. That is not because they are simply betting against the metal. Producers and other physical-market participants use futures and options to hedge business exposure, so short positions are a natural part of how the market works.
What made 2018 exceptional was that Commercial net positioning flipped to net long.
At the time, silver was trading around $14–$15 an ounce. My research then put average mining costs around $17 an ounce. The exact economics varied by producer, but the broad logic was clear: with silver depressed, the incentive to lock in future sales had fallen sharply.
The COT signal appeared around a major low. Similar net-long Commercial episodes also appeared around important lows in 2019 and 2022.
Why the signal mattered more than a simple oversold reading
The value of that setup was not that Commercials had become ‘smart money’ in a simplistic directional sense. They were still physical-market hedgers.
The important point was that their behaviour had moved far outside its normal historical range. When a group that is structurally net short changes its positioning that dramatically, I want to understand why.
Silver offered a cleaner example than gold. Gold also showed a strong bullish COT setup around the 2018 low, but Gold Commercials have been net long at other points in the available history. In silver, the shift was much more unusual.
This is why historical context matters when interpreting COT extremes. The same numerical reading can carry different significance in different markets.
The current metals picture is not giving the same bullish message
The historical silver case is useful precisely because the current sector-wide picture looks different.
COTbase combines positioning from gold, silver, copper, platinum and palladium into a precious-metals complex. That aggregate is currently in bearish territory and shows a larger-than-average bearish extreme.
I would treat that as a caution signal rather than an immediate call for a top. COT extremes can persist, and bearish extremes are not always as straightforward as bullish ones. But the current sector reading tells me that positioning across precious metals is stretched enough that traders should be careful about extrapolating higher prices indefinitely.
That broader context can be more useful than looking at gold or silver in isolation. In past examples, the complex has also produced meaningful bearish readings around important peaks.
Copper adds another extreme, but timing still matters
Copper is also sitting at an all-time COT extreme, which adds another unusual positioning condition to the metals group.
The key caveat is timing. An all-time extreme can remain in place for weeks or months before the market reacts. I would therefore avoid treating copper’s current reading as a short-term trigger simply because it is historically unprecedented.
The better use of the signal is to recognise that positioning has moved into rare territory and to watch how price resolves that pressure.
The lesson from silver is to understand the behaviour behind the data
The 2018 silver signal remains one of my favourite examples because the COT data reflected a real change in the economics and hedging behaviour of the physical market.
That is the standard I would apply today. The current precious-metals complex is bearish, copper is at an all-time extreme, and neither condition should be ignored. But neither should be turned into a guaranteed forecast.
COT data is most useful when it tells us that participant behaviour has changed in a way the price chart alone may not yet explain.
Watch this week’s full COTbase.com video here: https://www.youtube.com/watch?v=HrZVwlg1nSc&t=5s
