Gold and Silver on Hold Before Futures Expiration

For those head-faked out of your hedges on Friday’s false breakout above $1780 that should have been a very strong clue that the price of Gold (AMEX:PHYS) would not be moving higher before the end of the current futures contract period.  There are just too many people trapped short and hurting to allow any more real pain before the end of the month.  They were hit hard enough on Friday’s options expiration.  Gold attempted another run back to $1780 this morning but was easily stuffed back in the box and closed the day at $1763.25 on the October contract.    Don’t believe me? Go look at the volume data for today’s trading session.  15,000+ contracts do not change hands two days before expiration unless someone was trying to control the price.

By now everyone should have been out of this month’s contract and rolled forward into November’s.  The situation was not as bad in the Silver (AMEX:PSLV) pits.  December has been the most active contract for weeks now.  In gold those 15000+ contracts represented more than 10% of December’s action, while in Silver October’s action was less than 1% of the total volume, much more normal trading.

The bombing campaign happened in the Gold pits and everyone else was taken along for the ride.  One day they hit oil then they hit gold then they hit silver and on the fourth day they go back to oil.  Look for bullish signs within the hourly charts this week to tell you what could happen come Friday.  The longer the week goes on without a violation of yesterday’s low the higher the probability that Friday will see the high for the week.

 

 

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Tom Luongo

About Tom Luongo

Tom Luongo is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.

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