On June 30th we discussed the Mysterious Gold Order.
At the time there was a lot of excitement over this “order”. Well yesterday over 26,000 August 445 gold calls bit the dust. I have not heard anyone talk about this trade now for at least a couple weeks.
This was the call back on the 30th….
From a seasonality standpoint, I believe those calls expire just a tad early for the normal August rally. OTOH, if gold can get a strong rally going in the meantime, the seller of those calls is going to be sweating big. Don’t count on it.
Now the question is: Did someone “know something” or not. Whatever they might have known was surely worthless (at least as far as gold is concerned). Two things come to mind:
1) London Terrorist attacks
2) RMB repeg
What is interesting about these events is that if you asked any trader how gold might react to those, I am guessing the response would have been overwhelmingly wrong. Even today most everyone on the stock boards I partake in is shaking their heads over the YEN.
I believe the YEN explanation is righthere.
On June 28 we had a Spotlight on Silver. I do not have a fresh chart to show but a quick glance shows that nothing much has changed since then. We are still at or just below that triangle, having bounced from a breakdown right back up into it again and playing around at the bottom edge right now. Should this chart break down, a quick check shows the 200 EMA is still around 6.00.
That said, seasonality is now back in play on both gold and silver.
FWIW (and this should not be construed to be investment advice) I hopped back into silver this AM with December bull call spreads 720-750 for 10.5
Last week I bought deep ITM DEC gold 410 calls at slightly better prices than one could get today. Again this should not be taken as investment advice. In both cases I have know risk. Should gold do a quick pop, I may consider writing some OCT calls against the position converting into OCT-DEC Bull calendar spreads.
The biggest risk on both of these plays is the strength of the US$.
The biggest factor on the buy was seasonality.
Calls and spreads were selected to minimize the risk and there is plenty of time between now and the DEC expiry (in NOV).
Mike Shedlock / Mish/