Great and Wonderful Tuesday Morning Folks,
The pressure is on during the overnight with Gold seeing the most of the price beatings with the trade at $1,500.40, down $10.70 after being pushed down to $1,494.30 with the high to beat at $1,508. Silver is following with the trade at $18.015, down 15.2 cents after being knocked down to $17.855 with the high to beat at $18.135. The US Dollar is hardly worth talking about because it refuses to move with the trade at 98.425, up 17.7 points and close to its high at 98.44 with the low at 98.235. All of this was done sometime before 5 am pst, the Comex open, the London close, and as if parliament being shut down for a months’ time ain’t nothin’ but negative to precious metals.
We still show corrections in the price throughout our emerging markets watch with Venezuela’s Bolivar now pricing Gold at 14,985.25 showing a drop in value of 196.75 Bolivar with Silver trading at 179.92 showing a loss of 3.001 Bolivar. In Argentina, the Peso is pricing Gold at 84,029.21 showing a loss of 742.86 with Silver losing 12.18 with its price now at 1,009.01 A-Pesos. In the land of Turkey, Gold is now trading at 8,662.80 Lira showing a 44.76 Lira correction with Silver now at 104.01 losing 0.905 Lira.
September Silver’s Delivery Demands increased during yesterday’s trades with the fully paid for demands for Silver now at 918 showing an additional 33 contracts were added during yesterday’s push lower. So far this morning we show a Volume of 24 with a trading range between $17.885 and $17.77 with the last 2 buys at the high, yet still showing a negative of 13.5 cents from yesterdays close. The previous day’s activities within the delivery month are worth reviewing as the Volume recorded during yesterday’s trade showed 515 contracts traded out, or in. This is a very large Volume for such a small purchase, wouldn’t you say? We now have to keep an eye on Harvey’s stats to see how many of these buys were sent to the land without parliament or were actually delivered here.
Silver’s Overall Open Interest shows an increase which means the shorts are trying to control the roll with the Overall Count now at 217,610 Overnighters proving 1,094 more shorts had to be added into the trade in order to keep Silver from staying in place or rallying higher. Regardless the Resolutes are staying in place!
This options board in Silver is something else. It has kept me busy these past few years and still, the anomaly is going on to this very day. In short, there are still no large accumulated Silver option purchases at all out there, at least in the sizes that were done after the last election. Just after the last months Options came off the board I noticed the jump in Open Interest within the cereal months which I posted yesterday.
All the options that were purchased recently added another question; how many options are now “In The Money”? If Silver is to stay at or above $18 we’ll have a grand total for the last 3 months of the year at 33,551 “In The Money Calls”. Broken down, October has a 9,609 count, November is at 3,350, with December at 20,592. Each one of these options gives the buyer “The Right To Buy” at the strike price.
Also of note, each “In The Money” Call Option gives the buyer the right to buy 5,000 troy ounces at the strike price. If this (Resolute?) buyer was planning this since 2016, he is now in a position that should scare the crap stains into a bunch of $40,000 business suits (careful, this suit costs more than your education). Especially if the account owners actually plans on taking delivery which is what could happen the day after the Options expire. This coming 25th of September is the last trading day for the October Options. The very next day is the “Last Trading Day” for October Silver, meaning, if you don’t have the total cash amount needed for delivery, you are on margin call, and you are required to exit the trade.
The lowest Strike Price in October Silver is $13.75. This gives this buyer an option to purchase the physicals if he wants to, by simply allowing the option to expire into a futures contract. Please understand this is an example and not a fact. I’m simply giving you the process of what could happen “if”. All the buyer would have to have in his account is the difference between Zero and the strike price $13.75 x 5,000 (ounces = $68,750) and he can afford to buy 5,000 ounces at whatever price the market has on first notice day. This is only one example in hundreds of what could be happening.
We really have no idea if there is a “plan” out there. But I do know things are not normal in Comex Silver. In fact, I’m kind of curious what the Open Interest will be on Sept 26th if Silver stays at $18 or above, which in turn will change Octobers Open Interest a little. Right now, October Silvers Open Interest is at 1,547. What happens if we add 9,609 (exercised Calls) to that on the 26th? Well, it might mean something. I also looked at the Open Interest in November’s futures and noticed only 102 futures trading. Adding 3,350 to that would be something else too. Than consider December’s trades with all those “In The Money” Calls that now total 20,592.
We only offer up these ideas based on our personal optimistic observations surrounding the Silver trade. At the same time, the past 3 years has proven Options have to be part of the plan because this anomaly is still there with an impeccable turn in timing that started in the last days of May bringing in the original massive options purchase in July, then into September, and now heading into December. Keeping in mind all the things we’ve been thru together can only help our attitudes and gives those that believe deliveries will drain the control mechanism will change everything! Especially the prices!
So hang on tight to the real products, and shun the shorts, because those stenched suits are gonna need cleaning. Have a great day, keep the attitudes positive no matter what, and as always …