24 September 2015

Gold Daily and Silver Weekly Charts - Quite the Options Expiration - Will To Power

"The world is ours, we are its lords, and ours it shall remain. As for the host of labor, it has been in the dirt since history began, and I read history aright.  And in the dirt it shall remain so long as I and mine and those that come after us have the power.

There is the word. It is the king of words—  Power. Not God, not Mammon, but Power. Pour it over your tongue till it tingles with it. Power.”

Jack London, The Iron Heel

The Comex had an options expiration today for the precious metals, and they certainly rose to the occasion.

If you wondered why such an unusual thing happened, it is because the October contract is not all that important in and of itself, but it has some technical attractions given the option 'hook' which is offered.  A fine opportunity to skin the common trader if you will, who probably have no business swimming with those sharks.

There was some intraday commentary about why it happened as it did here.  

I admit that it went much higher than I thought it would, but it was well worth a bet on the side. Sorry, but even in my old age I cannot resist the occasional wager, the call of the wild.   lol.

Much more importantly, the physical bullion supply situation, or what some have been calling 'the float,' seems to be approaching some sort of crossroads, or even the elusive denouement of the gold pool that many of us have been long awaiting.

Gold is a bit easier to understand for me.  The underpricing of gold and the stubbornly high demand from Asia is sucking the paper markets dry of their underlying bullion.  

Stated a bit flippantly but generally correctly, if you underprice something that people want, and they ignore your clumsy PR campaigns and assorted devices to convince them that they do not want it, they may empty your shelves of it.

I keep wondering why so many people are missing this, even among the 'pros.'   Many listen to 'experts' who are parroting whatever they are instructed.  That is how it too often is.

But I do think that that quite a few are being misguided by what they think that they know well.  These are the ones who were deeply into the paper trade, and proudly knowing all its jargon, its nooks and crannies.    They see the same old rubbish system they know so well still spinning along, but cannot begin to imagine that incredible changes are taking place in other parts of the world of which they know relatively little, and care very little as well.

So ignoring or deriding the great sea change in global monetary exchange that some call the currency war, they are fooled by the familiar.
"In times of change learners inherit the earth; while the learned find themselves beautifully equipped to deal with a world that no longer exists."

Eric Hoffer
Silver has a tightness of its own, but it is manifesting differently.  The Bucket Shop is well supplied of silver, but that refuge for the bullion bullies, the central banks, are out of silver inventory altogether.  Judging from the Comex they do have JPM as their proxy, sitting on a silver hoard. But after that bulwark, there is little more behind it.  And the consumption is strong for silver in Asia.

The first chart below is one of the most important I can imagine for you to understand.   What it is basically telling us is that the demand for physical bullion from Asia has been overrunning the highly leveraged paper markets of NY and London, having taken all that the scrap and new mining outputs can produce.  And importantly the central banks themselves have turned to net buyers, and are attempting to secure their own sovereign supplies from the whirlpool of hypothecation.

This is resulting in abnormally high leverage in paper claims and a relative scarcity of gold for immediate delivery, as common sense would seem to suggest if we understand what is happening.  And it is.

Speaking of The Bucket Shop, there were very few deliveries tallied yesterday, and a slow bleed of bullion from the warehouses continues.   It looks like JPM is the dominant bullion player in physical silver.  Gold is piling up a bit in Comex Hong Kong.  Marshaling their forces for a big withdrawal most likely.

I am sometimes stunned by how many other sites refuse to even link to this sort of thing, even consider it, even mention it, and by how many are made so insecure at the thought of something different.   This information has been shut out of some of the finest venues, although they usually make up some lame excuse for it.  Or just ridicule it.

Most people do not want to leave their comfortable harbors of the familiar, and put out upon the troubled seas of thought.   That is what these kinds of generational change, the big turnings if you will, are all about.

So the option expiration is over.   Let's see what the follow through, if any, looks like into the weekend and next week.  I am not confident that the field is won, so let's play it a bit tightly for now.

Slowly, but surely, the times, they are a-changin'.

Have a pleasant evening.

Related:  Shrinking Supply of Physical Gold In London For World Demand
               Swiss Refiner: Physical Tightness Reflected in the Price of Gold 'Not At All'