(Kitco Commentary) - Market participants may be familiar with the Commitment of Traders (COT) report. The report shows how different groups of futures traders are positioned in markets like silver. It helps reveal when professional traders are heavily leaning bullish or bearish, a historically important piece of data that I believe should be strongly considered when attempting to time long-term silver trades and investments.
The group to watch in the COT report is managed money, which largely represents hedge funds, CTAs, commodity funds, and other professional speculators in silver futures. In silver, the contrarian approach has paid off, with excessive managed money positioning providing both the signal and, most importantly, the fuel for a potential price reversal in the opposite direction.
The table highlights how extremes in speculative positioning have lined up with major shifts in silver’s trend. Managed money shorts peaked near 42,000 contracts in February 2024, then steadily declined as silver pushed to progressively higher highs, eventually reaching exceptionally low levels in January 2026 and beyond.
The February-to-May 2026 period (bolded) stands out. Silver prices were falling even as managed money shorts continued to shrink, albeit at a much slower pace. This indicates that weakness during the period was not necessarily driven by new bearish bets alone. General selling pressure was strong enough to push silver lower despite continued short covering, allowing professional traders to continue covering their positions at lower prices.
So where does that leave us? Since May 2026, managed money short positions have begun rebuilding and now stand at approximately 12,500 open contracts. From a contrarian perspective, that's a huge improvement from where positioning stood just a few months ago, at fewer than 5,000 contracts. However, it is still a far cry from the more than 25,000 short contracts sustained for months in 2023 and earlier, culminating in the historical extreme of 42,000 short contracts in February 2024, just ahead of silver's breach of $30 and subsequent rally to $120.
I will be watching to see whether short positions continue to build and, most importantly, whether silver prices stop responding to that increasing bearish pressure.
