Divergence In Gold and Silver Open Interest

Someone asked to see the open interest divergence in the gold and silver futures graphically that I mentioned in an earlier post here.

As always, Nick Laird of Sharelynx.com has the goods.

By itself the open interest divergence is not compelling, just odd.

But with everything else, especially the great and ongoing divergence in ETF and Fund physical inventories, and it begins to approach the irregular.

 

That is not to say we can comfortably call a bottom here, as oversold we might be at old support.  The downtrend will not be broken until we see a higher high.  

 

It would not be well to underestimate the thugs and pampered princes and the markets they that they control.  

 

What they cannot manage is the physical market which will eventually break them, as it did the London Gold Pool.  But that will take time.  But when the time comes, it will fall apart rather quickly unless some of these jokers wise up first and stop the spiral of inventory leverage and paper before it becomes a critical, systemic problem. 

Gold And Silver Divergence: Enter the Dragon

After beating Chuck Norris like a rented mule.

Most people who follow these things are aware of the remarkable expansion in open interest on the Comex in silver contracts during this price decline.

This is unusual because more often open interest follows prices, as metal bulls open contracts with buying or close them out with selling.

Gold is following the more conventional decline.

But on the other hand, we have silver inventories increasing remarkably in the 'transparent holdings' which Nick Laird, data wrangler, tracks for us.   Nick has some of the best collections of regularly maintained charts around.

And gold inventories have continued to be drawn down.

One might say that physical gold is disappearing, and silver is being overwhelmed by paper selling.  You could conclude other things of course.  And that is part of the problem with the opaque NY-London markets, so many of which have been revealed to be rigged.

I emailed my friend Dave last night and said, 'I think with this overnight plunge to 1183 the bottom is in, with a possible retest.'   Let's see if that holds.  It certainly is oversold with record short interest in gold.

One of the reasons it feels like a bottom, besides horrible sentiment,  is because the usual suspects and shills have been slithering out from under their rocks to spread their gloom, for their own books and for some of the funds as well I suspect.

China comes back from its holiday this week.  And they are not happy about alleged US interference in the Hong Kong demonstrations among other things.

As you may know one of the big rumours is that a deep pockets long is holding quite a few December silver contracts and refusing to fold them against downward price pressures.  The most frequently heard name is China.  There are a number of motives attributed to this.

Since the markets are opaque we can only guess.  I am keeping a close eye on the fundamentals, as I think the technical measures on the US markets are dodgy to say the least.  The Banksters have their fingerprints all over these markets, and there are too many odd things going on to make a reasonable person confident in their integrity.

Of course only about 1 out of 10 Americans bring a reasonable skepticism to these matters.  So for now the bullion Banks are having their way.  Not so with the rest of the world, however.

Do you feel a marked friction between the US and Russian/China and a few other nations?  Those I believe are the manifestations of the ongoing currency war, which is another name for the strain of a continued supremacy of the Imperial Dollar as the measure of value and primary basis of international exchange.

The times they are a-changing.

 

Next Tuesday 26 June Is Silver July Options Expiration - Shenanigans Reminder

Perhaps the reminder is a bit late, and the shenanigans have already occurred.

Although both gold and silver were hit hard around the FOMC meeting announcement, silver has been hit a bit harder.

Most curiously in yesterday's big down day the overall open interest EXPANDED by about 6,000 contract, mostly in the outer months of Sept - Dec. My friend Dave brought this to our attention this morning as Bill and some of the guys were discussing it.

Comex silver o/i went up +6034 contracts yesterday. Sept silver was up +4617, Dec silver up +976. July actually increased +147. This would be unusual for a day like yesterday but also very unusual given the July "contract roll" period is starting.

We did not see a similar expansion in gold open interest.

I cannot help but think that this is related to the July silver option expiration on the Comex next Tuesday and the end of trading.

I also have it in the back of my mind, subject to more data, that there has been an effort to depress the price of silver around the end of quarter as a few certain big shorts seek to make the losses on their silver short positions look a little better. But for now that is speculative.

So, unless the exchange report was incorrect, it is very odd for a large expansion in silver to occur on a huge down day, unless there was something like manipulative shorting.

As always, one must assume the lampreys are riding the momentum trade with the sharks. A hit on metals at the FOMC meeting is a traders' commonplace.

June 26 Comex July silver options expiry
June 26 Comex July copper options expiry
June 26 Comex July silver futures last trading day
June 27 Comex June gold futures last trading day
June 27 Comex June copper futures last trading day
June 27 Comex July miNY silver futures last trading day
June 29 Comex July silver futures first notice day
June 29 Comex July copper futures first notice day
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

Big Drop in Comex Gold Open Interest

The large drop in the August contract open interest (61,257) is to be expected since this is 'roll week' and those who are not standing for delivery will have to close their positions by Thursday night.

The new positions or 'rolls' into the October and December contracts totaled 40,372.

Recall that this was also an option expiration week.

Overall there was a net loss of 21,894 contracts.

It is too soon to tell if this was a capitulation that blew out the weak hands, but it looks as though it might have been one. The momentum traders will likely stand on the sidelines until gold can clear 1180, which was prior support. Traders have their eyes on the 200 DMA which is around 1145.

Comex Daily Bulletin #144