Option Expiry, a 3-day Weekend and a Raid on Gold and Silver. What a Surprise!
It what should come as a shock to no one, the metals have been mercilessly driven lower today following a positive Comex open. All while the dollar was flat, too. Hmmmm. Who would have seen that coming?
Today is the third Friday of the month. This means that options on stocks and stock indices expire this afternoon. This includes all ETFs, most importantly GLD and SLV. So, after a surprisingly positive overnight and Comex open, the raid was ON. Further impacting the selling pressure is the 3-day weekend that lies ahead for the U.S. With all the crazy shit going on in the world these days, nervous and weak-handed longs would rather be out than in over the weekend and, in all honesty, can you blame them? Here at 10:30 EST, I expect the PMs to remain under pressure for a while longer, maybe stabilizing and trending higher toward the close and on the Globex. We'll see.
So, I'm sitting chilly right now. I don't want to fiddle with silver just yet because it faces its own option expiry next week. I'd like to buy some gold but I'm waiting for it to dip toward 1705 again and I still think (hope) that it could fall to 1680, as well. Again, we'll see.
Here's an updated chart of the POSX. For now, it looks like its wants to head lower. (Now that I've typed that, I'm sure it will head higher.) At any rate, until we get some kind of actual resolution in Greece next month, The Pig will likely continue to fluctuate around in this 79.60 + 1.00 area.
A Turdite pointed out yesterday that main metal correlation is actually silver vs the euro. He has a valid point. Take a look at the charts below. For fun, do what I do: Print them. Put one on top of the other and then hold them up to the sun or some other bright light. (This is how we did it in the old days!) Note the ridiculously high correlation and then ask yourself this all-important question: WHY?? Why would these two, mostly-unrelated items trade in such close correlation? To me, the answer is WOPR. Some folks claim that 90%+ of the PM markets are HFT algos (WOPRs). These two charts would certainly seem to confirm that. Why else would a monetary and industrial metal move in lock-step with a particular currency? For instance, does silver mining capacity and production have anything to do with European stability and growth? Not really. So, again, if the fundos are unrelated, why do these two trade together?
Crude is rolling again today. I have a high of 103.88 and a last of 103.26. The area around 103.50 is very significant resistance. Be on the lookout, though, for a false breakout that stops at 105. Above 105, it's headed back to 115 and $4.00/gallon gasoline. You've got to figure that The O'bottom Regime would very much like to avoid that eventuality.
Lastly, I give you this ES (mini S&P) chart without further comment.
Just two "news" items for you today. First, there's this. In one sense, it's a happy story as the folks that found this stash will be rewarded. Primarily, though, this story makes me kind of sad. I imagine that someone, fearing confiscation by the Nazis, hid their gold. That person then never returned get it because, I imagine, he/she died in the conflict. In the end, it just goes to demonstrate once again that humans and fiat are mortal. Gold lives eternal.
And then there's this. I saw this earlier today and now it's been picked up by ZH. I have no idea what the heck is going on here but something is seriously f'd up. First there was this:
And now there's this:
That's all for now. I'm recording this week's podcast in an hour or so and I'll post it later this afternoon so please come back and listen to it. Also, keep a close eye on the CoT numbers and any changes in the silver lease rate heading into the weekend. Next week promises to be another wild one!