Big surprise, huh? And I wouldn't expect much excitement the rest of this week either. Next month, though?...
For this week, however, we are stuck. Stuck with options expiration. Stuck with First Notice Day. Stuck in a moment and you can't get out of it. At least until next week.
For today, the algos are in charge and The Cartels are ensuring that price gets pegged where they want/need it for option expiration and the CoT survey. I don't expect any substantial rallies but I don't expect any major selloffs, either. The charts below are provided in order to show you where I would expect buying support to kick in should a selloff accidentally generate some downside momentum.
Now, as we head into the rest of the week and First Notice Day on Friday, expect a general tone of weakness and and more of this current sluggishness. Why? More sellers than buyers.
- First, The Cartels want to "dissuade" as many as possible from standing for delivery. They, the Comex and the CME simply want everyone to roll into the next delivery months and continue on with the (very profitable) paper games.
- More significantly is the impact of human nature. If you have a trading position of 100 Dec12 gold contracts and you have no intention of taking delivery, you're going to have to sell those babies before the close on Friday. You'll most likely want to roll all 100 into the Feb13...but...do you do that all at once? Maybe, instead, you buy 50 Feb13s on Friday and then you hold off on buying the other 50 until next week, hoping to get a better price and a lower overall basis? In this example, there's 100 contracts of selling pressure but only 50 contracts of immediate buying pressure. Down goes price (a little) and down goes Open Interest (a little) until the other 50 contracts are put back on.
Between these two influences, we're likely stuck with a weak metals market until next week.
But then the fun begins! All the fiscal cliff BS will really kick in in December. There will be plenty of talk about:
- U.S. debt downgrades
- Debt ceiling breaches and treasury defaults
- $1T+ deficits ad infinitum
- More "unsterilized" QE as Operation Twist ends on 12/31
All of this will propel gold and silver through the nasty and brutal, year-long caps of $1800 and $36. The stage will then be set for a remarkable, crazy, wild and...yes...historic 2013.
Therefore, keep the faith and hang in there. Take the next few days to step away from your computer for a while and do some Xmas shopping. Maybe, instead of another worthless, run-of-the-mill gift, you should instead hand out ASEs or Maples to all of your friends and family this year. I still have the first tube of ASEs to ever make it into my safe (at the bottom of an undisclosed lake). My brother gave them to me as a Christmas gift 7 or 8 years ago. Must have cost him about $100 back then. Worth about $700 now. Beats the crap out of the other gifts I received that year, none of which I can even recall today. I'm sure that the HAA, Provident or JMBullion will be happy to help you with all of your holiday shopping needs!
Have a great day!