Gold Daily and Silver Weekly Charts - Big Bounce on 'Flight to Safety'

Gold and silver 'popped' today despite the higher dollar and risk off trade. It happened shortly after I posted the NAV premiums chart, having seen some odd action on the tape, and watching the action closely into the option expiration tomorrow in silver. It is also expiration for copper.

The metals often act oddly around their Comex Option Expirations, depending on a number of factors.  If you remember nothing else, remember that.  You can get some nice entry and exit points around those days, in the lead up and aftermath.

The fellows who write and trade those options play games against them and with them, make no mistake about it. People who buy options on the retail side are typcially gamblers unless they are hedging. 

Sometimes guys who are deeply knowledgeable of one or two indicators get lost in these little events that occur. But you can often spot them in the anomalies in the tape.

One has to watch many things and be open to various possibilities. That is why I do not like to 'predict' so much as calculate probabilities, since one tends to fall in love with their models and forecasts.

That is why I so often like Jim Sinclair's comments. He understands the short term moves for what they are, and treats them accordingly, ie with little regard but keeps his eye on the prize, the primary trend.

Chasing a model that predicts wiggles is a mug's game, wherein you are always chasing 'a better model.' If the model were any good, you certainly would not hear about it on a free web site. And for the most part, the wiseguys make money with practical models but gain their edge by 'cheating' using asymmetric information and stacking the odds in their favor.

And I hope to be in this for money, not a fan club.  So sorry, but there are no mechanistically precise models that crank out the future in advance which I can share with you.  There are plenty of other fellows who can do that for you, and often for a price. 

Do yourself a favor if you are not doing it full time for some reason AND making consistent money and just stop trading for the short term, or reduce your activity significantly. You cannot beat the shenanigans, mispricing of risks, and transaction frictions like commissions.

One can forecast the longer term trends on fundamentals, but that is something else entirely.   You have to be prepared to ignore the 'wiggles,' especially in the kinds of markets we have today.

At 58 the gold/silver ratio was a bit stretched against the peoples' metal.

Markets remain edgy about Europe.

End of quarter this week. Let's see how it goes. I remained concerned that some of the bigger wiseguys (JPM) might smack the metals to make their carried losses look smaller for quarter end. It is hard to see that since one does not know their overall net positions in all markets.

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

SP 500 and NDX Futures Daily Charts - Risk Off on Euro Summit Concerns

It was a 'risk off' day as stocks were sold and investors moved into safer plays.

This is the end of quarter week, so the tape may begin to take a coat of paint in a day or so, barring more storms from the continent.

Funds tend to sell their losers first, then pump up their holdings to mark them as winners. So watch out for the old 'one-two.'

Interesting that gold and silver went countertrend today. I am surprised at how few have figured it out.

NAV Premiums of Certain Precious Metal Trusts and Funds - Silver Undervalued

The premiums of some of the more popular Funds are back to 'normal' levels, but certainly not overly enthusiastic.

And we see a significant divergence between the metals and stocks today, suggesting perhaps that the selling in the metals had been overdone. Stocks are sharply lower, but the metals are stubbornly positive. And yet the US dollar is higher as well. A flight to safety? It looks like it.

The Gold/Silver ratio at 58 reflects the underperformance that silver has shown of late, in response to its higher beta and partial industrial component, and most recently I think because of its option expiration at the Comex tomorrow. The call holders may have been shaken, and so it is now time to skin the put buyers.

Michael J. Burry's Commencement Address at UCLA - Credibility Trap and the Predator State

Burry is describing the credibility trap that followed in the aftermath of the financial fraud that gripped the developed world through the Anglo-American banking cartel, perhaps without realizing it in those terms. This is why there is no honest discussion of what has been happening.

The financial crisis is not over. The bank bailouts and subsidies are as much a part of the vast financial fraud that is destroying the real economy as the original packaging and promotion of risky mortgages had been.

"Michael J. Burry is one of the few who saw the crisis coming in all its glory and bet heavily on that unmistakable eventuality. Bernanke and Geithner and Greenspan and Summers and Rubin did not see it coming. Yet, who has been in charge of guiding us out of this predictable and self-inflicted crisis? Greenspan's prodigies: Bernanke, Geithner, Summers, Rubin and many other profoundly compromised parties.

Michael J. Burry, in the video below, delivers the keynote address at the 2012 UCLA Department of Economics Commencement. In it, he describes the process he undertook in determining that the credit bubble would pop, the housing sector would crash, and that the financial world's blindness to the obvious would, if property harnessed, vault him into the 1%. All of it t was 100% foreseeable. There was no "black swan". Yet, our most esteemed economic leaders were completely blind to it.

In 2010, Burry wrote an op/ed in the New York Times entitled, I Saw the Crisis Coming. Why Didn’t the Fed? No member of government ever reached out to Burry to discuss the issue - to see if there was any way to bring his focused wisdom and uncompromised analysis to a government that was tragically deficient. Instead, within 2 weeks of the publication of the op/ed, all 6 of his defunct funds were audited. Soon thereafter, the FBI initiated an investigation into his activities.

Greenspan's prodigies are beyond compromised. That the IRS and the FBI were sent to create havoc for Burry is a form of abuse of process. Our democracy is failing us. Checks and balances have been subverted by money, people in leadership positions protecting their failed legacies, and absolute impunity for the power elite who are successfully marginalizing the truth-tellers. As Burry notes, they are rewriting history."

Capitalism Without Failure