The Precious Metals sector has been on a tear since early July - Please see our prior posts detailing our tactical long positions.
This being said, price ebbs and flows & both Gold & Silver are vulnerable to a sell-off here..
1) COT data has shown aggressive selling by both Producers, as well as the Bankster Swap Dealers.. The Producer Long Future Position ranks at a terrible 4% score on a 5 year basis, standing at a paltry 17k longs vs (206)k shorts - This net position scores a terrible 0% on a 18m basis and 12% on a 5 year basis. Swap Dealers have also been aggressive sellers into this rally (they always are) pitching 65k contracts over the past 4 weeks.. What is noteworthy is that this has mostly been done by adding shorts to the tune of (55k), while pitching (10k) longs..
Translation - The Swap Dealers are holding their longs which means they want to be in play for pending further gains, but simultaneously are preparing to profit on a normal corrective reaction when it arrives.. Producers are ecstatic at selling their production at 1300+ prices given many of them have significantly lowered AISC over this bear cycle..
Given the magnitude of this rally, a normal 38% Fib retrace will take you down to the 1,290ish level or $50 lower from current levels.. Because of the inherent leverage in futures, this scare will be enough to wipe out and/or stop out many leveraged players, while the Banksters would be ringing the register on all of these recent shorts.
Looking at the price charts we can see prices now accelerating at a unsustainable angle/slope, so at minimum GC/SI will need to pause and digest these recent gains..
Further, the Gap higher tonight on the Latest North Korea news, has got us suspicious as this is typically the "cover on the news" moment the banksters look for before smashing price (think back to the Trump election night action).. If they were aggressive sellers into the 1315 level as of the last COT, you can bet they are shorting this latest rally as well..
So 50k shorts at $100 per dollar move nets them $5m per dollar drop in GC.. Once they engineer the inevitable $30-$50 selloff, that will net them between 150-200m on this latest scam.. So we ask you traders, how much will you profit when the PMs correct, or how much will you be hurt?
Action
We are extremely bullish Gold & Silver over the intermediate to Long term with much higher prices on the way.. However, we have made too much money here over the past 2 months to give half back to the banksters..
1) Buy the Dec 1340-1270 Put spread for approx DR $(25)
2) Sell the Dec 1400 Calls for approx $12..
The net cost of this insurance is $(13) while you leave yourself open for an additional $62 of upside - a fair trade-off.
With the Debt ceiling/Korea/Nafta/Trade Wars + a equity bull getting long in the tooth, don't get scared out of your core long positions - Instead hedge some of your position professionally, just like the Swap Dealers are now doing! - Add some tactical shorts and hedge some longs.
Good Trading to all.
This being said, price ebbs and flows & both Gold & Silver are vulnerable to a sell-off here..
1) COT data has shown aggressive selling by both Producers, as well as the Bankster Swap Dealers.. The Producer Long Future Position ranks at a terrible 4% score on a 5 year basis, standing at a paltry 17k longs vs (206)k shorts - This net position scores a terrible 0% on a 18m basis and 12% on a 5 year basis. Swap Dealers have also been aggressive sellers into this rally (they always are) pitching 65k contracts over the past 4 weeks.. What is noteworthy is that this has mostly been done by adding shorts to the tune of (55k), while pitching (10k) longs..
Translation - The Swap Dealers are holding their longs which means they want to be in play for pending further gains, but simultaneously are preparing to profit on a normal corrective reaction when it arrives.. Producers are ecstatic at selling their production at 1300+ prices given many of them have significantly lowered AISC over this bear cycle..
Given the magnitude of this rally, a normal 38% Fib retrace will take you down to the 1,290ish level or $50 lower from current levels.. Because of the inherent leverage in futures, this scare will be enough to wipe out and/or stop out many leveraged players, while the Banksters would be ringing the register on all of these recent shorts.
Looking at the price charts we can see prices now accelerating at a unsustainable angle/slope, so at minimum GC/SI will need to pause and digest these recent gains..
Further, the Gap higher tonight on the Latest North Korea news, has got us suspicious as this is typically the "cover on the news" moment the banksters look for before smashing price (think back to the Trump election night action).. If they were aggressive sellers into the 1315 level as of the last COT, you can bet they are shorting this latest rally as well..
So 50k shorts at $100 per dollar move nets them $5m per dollar drop in GC.. Once they engineer the inevitable $30-$50 selloff, that will net them between 150-200m on this latest scam.. So we ask you traders, how much will you profit when the PMs correct, or how much will you be hurt?
Action
We are extremely bullish Gold & Silver over the intermediate to Long term with much higher prices on the way.. However, we have made too much money here over the past 2 months to give half back to the banksters..
1) Buy the Dec 1340-1270 Put spread for approx DR $(25)
2) Sell the Dec 1400 Calls for approx $12..
The net cost of this insurance is $(13) while you leave yourself open for an additional $62 of upside - a fair trade-off.
With the Debt ceiling/Korea/Nafta/Trade Wars + a equity bull getting long in the tooth, don't get scared out of your core long positions - Instead hedge some of your position professionally, just like the Swap Dealers are now doing! - Add some tactical shorts and hedge some longs.
Good Trading to all.