As Silver Opens In The East, Here's How The COT Looks

The Commitment of Traders Report & Silver Market Analysis – David Morgan, January 16, 2026

Key Concepts: Commitment of Traders (COT) Report, Commercial Traders, Net Short Position, Silver Futures, Leverage, LBMA (London Bullion Market Association), Arbitrage, Parabolic Move, Price Discovery, Physical Demand, Hyperinflation, Fiat Currency, Relative Value (Silver vs. Oil & Platinum).

I. Introduction & COT Report Overview

David Morgan addresses common misinformation surrounding silver market dynamics, specifically focusing on the Commitment of Traders (COT) report as of January 13th, 2026. He emphasizes the importance of understanding the data, acknowledging potential inaccuracies (estimated within 1-2%) but asserting the posted numbers are generally reliable. The core of the discussion revolves around analyzing the net short position held by commercial traders in silver futures contracts.

II. Analyzing the Commercial Traders’ Position

Morgan details the calculation of the commercial traders’ net short position. He explains that commercials hold 97,887 contracts short and 42,595 contracts long. Subtracting the long position from the short yields a net short position of 55,000 contracts. Since each contract represents 5,000 ounces of silver, this translates to a net short position of 275,000 ounces of silver. He acknowledges the existence of “spreading” (contango) – the difference in price between current and future delivery months – which could reduce the apparent short position, but chooses to use the conservative 55,000 contract figure for his analysis. Contango is defined as a situation where futures prices are higher than the expected spot price, allowing sophisticated banks to profit from the difference.

III. Comparing Short Position to Available Silver Supply

Morgan then compares the 275,000-ounce net short position to the total silver available on the exchange (COMEX). He differentiates between registered silver (held by dealers and immediately deliverable) and eligible silver (potentially deliverable but requiring additional steps like medallionization). The total silver on COMEX is 429 million ounces. He points out that 429 million ounces is significantly greater than the 275 million ounce net short position, debunking claims of extreme leverage (e.g., 100:1, 200:1, 300:1). Even considering only the readily available 120 million ounces, it’s roughly half the net short position, further diminishing the leverage argument.

IV. Acknowledging Limitations & The LBMA Factor

Morgan stresses that the COMEX data only represents one part of the picture. He acknowledges that commercial traders may have offsetting positions at the London Bullion Market Association (LBMA), which are not reflected in the COMEX report. This means the net-net short position could be significantly lower – potentially even zero or net long. He cites a report suggesting JP Morgan may have already covered their short positions and are now net long, but cautions against drawing definitive conclusions without access to their complete books. He emphasizes the importance of recognizing that banks can be short on paper (CME) and long through offsetting trades elsewhere (LBMA, Shanghai, Mumbai, India).

V. Parabolic Move & Market Cautions (Adam Hamilton’s Analysis)

Morgan references an article by Adam Hamilton, posted on his X account (@silverguru22), discussing the current parabolic move in silver prices. A parabolic move is defined as a rapid, almost vertical increase in price. Hamilton cautions that such moves are unsustainable and typically followed by significant corrections. Morgan echoes this sentiment, advising members of The Morgan Report to prepare for various scenarios (price increases to $100, $200, or even $1000). He highlights that silver is currently in price discovery – a period where the true market value is being determined.

VI. Arbitrage & Physical Demand

Morgan explains that silver’s price movement is driven by arbitrage opportunities between markets like Shanghai and New York/London. He notes that the market is tight and physical demand is exceeding other factors. He emphasizes that while a parabolic move is concerning, it’s crucial to avoid panic selling, especially considering the potential for hyperinflation.

VII. Relative Value & Investment Strategies

Morgan suggests that, while selling silver entirely is unwise, investors should consider reallocating profits into undervalued assets. He specifically recommends buying platinum with silver (silver is currently overvalued relative to platinum) and buying oil with silver (silver is also overvalued relative to oil). This strategy focuses on purchasing assets based on their relative value rather than solely on the price of silver.

VIII. Long-Term Perspective & Fiat Currency Concerns

Morgan expresses skepticism about the long-term viability of fiat currencies, referencing examples like the Zimbabwean dollar and Argentine peso. While he doubts a complete collapse of the US dollar, he anticipates its purchasing power will continue to decline relative to silver. He notes that silver gained 140% against the dollar in the previous year and questions whether a similar gain is possible in the current year.

IX. Data & Statistics Mentioned:

• COMEX Silver Futures (Jan 13, 2026): Commercials net short 55,000 contracts (275,000 ounces).
• Total Silver on COMEX: 429 million ounces (Registered + Eligible).
• Silver vs. Dollar Performance: Silver gained 140% against the dollar in the past year.
• US Government Debt: Approaching $37 trillion.

Conclusion:

David Morgan’s analysis provides a nuanced perspective on the silver market, challenging common narratives about extreme leverage and potential bank failures. He emphasizes the importance of understanding the complexities of the COMEX and LBMA, acknowledging the limitations of available data. He cautions against excessive optimism regarding the parabolic price move while simultaneously advising against panic selling, advocating for a strategic approach focused on relative value and long-term wealth preservation. The core takeaway is to be informed, cautious, and prepared for various market scenarios.