25 July 2012

Gold Daily and Silver Weekly Charts - Up to the Trendline In Options Expiry - Summoning the Bernank

Gold and silver caught a pretty decent pop higher today as the markets turned their eyes from the awful earnings reports given by the real economy stocks, and looked in a candlelit mirror chanting, "Ben Bernanke, Ben Bernanke, Ben Benanke."

Once again we are in the shadow of Comex Options expiration, last trading and first notice days.

July 26 Comex August gold options expiry
July 26 Comex August copper options expiry
July 27 Comex August miNY gold futures last trading day
July 27 Comex July gold futures last trading day
July 27 Comex July silver futures last trading day
July 27 Comex July copper futures last trading day
July 27 Comex August miNY gold futures last trading day
July 27 Comex August E-mini copper futures last trading day
July 31 Comex August gold futures first notice day
July 31 Comex August copper futures first notice day

Far be it from me to tell anyone what to do. But I will say that I have stopped trading all options, both in stocks and commodities.

The rigging that characterizes the markets overall, through the manipulation of price and the mispricing of risk, is most pronounced in the paper derivatives such as options and artificial constructs like some of the ETFs which are designed to lose almost without regard to what the market does.

Gold and silver could go either way here. I do not have enough visibility into where the suckers are placing their bets, and where the wiseguys are placing theirs, at least for the short term.

I do believe that one of these days a major player is going to pop these markets, and rip the faces off some of the funds and specs who are leaning nakedly on the short side in a particularly painful and protracted rally from hell. I just do not know if we are there yet. The more I look at the structure of the Comex and their position and delivery policies the more it looks like a paper Ponzi scheme that could be tough to beat on its own turf.

Despite some of their identifiable predilictions, the Banks and big machers of the Street are very open minded about screwing anybody and everybody. They have no abiding loyalties or allegiances except to themselves.

I see where the House has passed the Ron Paul Bill to Audit the Fed. While that sort of thing may be gratifying I think the Senate also has to pass their own version of it, and then reconcile the two. And that prospect does not seem likely.