The signal we’ve been looking for may be right here and right now

 Good Friday Morning Folks,    

      Gold is trading lower in the earliest morning reports with the last transaction at $1,228.10, down $2.30 inside a tight trading range between a high of $1,231.10 and the low at $1,226.10. Silver is down to $14.325, dropping 7.7 cents from the close within a trading range of $14.41 and $14.29, all this done sometime way before 5 am pst. The US Dollar is under support with its trade at 96.895, up by 19.5 points within a range between 96.94 and 96.635. The volatility under the Venezuelan Bolivar is bound to be a topic at the G20 as Gold’s price dropped to 303,948,800 Bolivar, losing 1,203,100 with Silver at 3,544,589 losing 12,429 Bolivar over the past 24 hours.     

      Today is the starting day for the December Delivery cycle with a demands for physical at 3,541 contracts, asking for 17,705,000 ounces, with a volume of 141 so far this morning. The signal we've been looking for may be right here and right now with the Overall Open Interest in Silver futures currently at 184,845 Overnighters as the contract count collapses by another 5,718 obligations, at a time when the prices are barely moving, and right before a major G20 gathering of global money apologists.     

      Part of my focus has been on purchased Call options out in July and Dec 2019 Silver. With the Open Interest starting to drop in rather heavy fashion this past week, I thought it might be a good idea to go over the increases in the purchased Calls as the July  Count now stands at 32,347 “rights to buy” gaining 1,149 additionals than last month’s count. The Sept 2019 AG Calls only have 507 “rights to buy” and may be used later with the idea that the 9/19 Calls will be used like the March Calls are being used now (that is, if my thesis is correct). The December 2019 Silver Call Options now total 42,863 “rights to buy” gaining 2,803 additionals with an almost complete stoppage of bulk purchases back on 11/7/18 when Dec ’18 Silver was at $14.72. I've written recently that the March Calls are gaining buyers “at or just above” the “in the money” strike prices with the idea (in my thesis) that these purchased Call Options can be used to help the shorts offset their trades by exercising these Calls against the short contracts. That is “if” it got to the point that the markets went sharply higher or even going as far as Venezuela. I came up with this thesis by asking myself; If I was at the head of a major banks trading desk, and was assigned the sole purpose of making sure the bank I worked for was safe against a move they know is going to occur, what could be done? This would be one of the many things I would do to exit the short trade and keep the Open Interest side of the futures trade in question, which in turn would keep the outsiders in the dark, since no one watches options.     

      The G20 has a lot on the table this weekend with Germany’s Deutsche Bank (not a central bank, “my too early morning” mistake in yesterdays missive) getting a second day of “Raid”, this time with rumors that arrests were made during the raid. Paris – France was burning this week because their elected socialist government raised taxes on energy and somehow the voting public doesn't like the idea they have to pay more all the while their incomes are falling because of inflation. Socialism … hello!!  Then there is the Brexit which can’t seem to leave even though the voting public demanded it.  Also of note, Angela Merkel’s jet had to make an emergency landing a hour or so into the flight, and she had to resume the trip on a passenger flight. Did the Deutsche Bank check bounce or something?  Just a question!    

       The problems within the financial system are starting to stink up the place and at the same time the prices of precious metals movement are barely being noticed. The only highly noticeable exceptions is the high volume of trade inside the prices swings, which only futures traders understand. Someone may be getting ready for something like a much higher move in prices. We’re ready, we think, how about you? Have a great and wonderful weekend, hold your metals close, keep that attitude positive no matter what, and as always …   

Stay Strong! 

J. Johnson