COT Report Training Video – Part 1


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
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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.

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