Great and Wonderful Friday Morning Folks,
The Precious Metals were doing well until 9pm est, when the calm got applied all at once, with Gold now trading at $2,065.90, down $3.50 after hitting a low of $2,055.50 with the high up at $2,089.20. Silver of course, owns the sell side with the trade down 12 cents at $28.28, after reaching down to $27.935 with the high way up at $29.915. The US Dollar is going higher in anticipation of the Unemployment and Wholesale Trade Reports with the trade valued at 93.16, up 39.2 points and close to the high at 93.215 with the low to beat down at 92.74. Of course, all this happened already, before 5am pst, the Comex open, the London close, and after the “SEC Enforcement Co-Director Steven Peikin decided to leave the agency on August 14 in hurry up fashion (2 weeks notice), … during his tenure, the agency says over $13.5 billion in disgorgement and penalties was obtained by the agency.” This stolen money of course, will never be given back to those it was stolen from in the first place. What a racket!
In Venezuela, Gold is now trading at 20,633.18, giving the holder a 4 Bolivar gain with Silver’s price at 282.447 Bolivar, providing a gain of 0.951. Argentina’s Peso now has Gold’s price at 150,062.99 Peso’s producing a 175.43 gain with Silver’s price at 2,054.26, giving the holder an additional 8.89 A-Peso gain. Over in Turkey, Gold’s price now sits at 14,827.38 Lira, proving a reduction of 140.77 with Silver losing 0.736 of a T-Lira with the last trade at 203.306.
August Silver’s Delivery Demands now has a posting of 155 fully paid for contracts waiting for receipts and with a Volume of 8 up on the board with a trading range between $29.53 and $28.29 with the last swap at $28.325, down by 6.2 cents so far today. This proves a reduction of 8 in count after yesterday’s trades that had a total Volume of 76 hitting the board in between $28.85 and $27.535 with the settled price calculated at $28.387. The Overall Open Interest, one of our “tells”, continues to prove the power of the climb, as another 2,457 more short contracts had to be added or the prices would have increased even more than they did with the total count now at 208,019 Overnighters going against the physical Resolutes.
August Gold’s Delivery Demands now shows a post of 5,122 fully paid for contracts and with a Volume of 216 already up on the board with an early morning trading range between $2,055 and $2,040.10 with the last swap at $2,045.90, down $5.60 so far today. This proves that 1,743 contracts got papers, somewhere between the Comex and London, during yesterday’s trades that had a Volume of 294 inside a trading range between $2,063 and $2,040 with the last buy at $2,058.30. Gold’s Overall Open Interest, which is all the paper that can legally be excused into the markets, shows a reduction of 1,375 pieces of paper leaving 553,673 short contracts going against the physicals.
Europe is also suffering from the sudden shock of a bio weapon release with some European funds posting a stunning $835 Billion trading loss within the first half of 2020. Over here, we see Freddie Mac warning us that as much as a 40% drop in Multi-family loan originations is possible in 2020 compared with 2019. None of this points to a recovery, it seems to be suggesting a continuation of trend.
First and Foremost; this is not trading advice! It is a simple observation, in time value inflation, which in turn, either points to a real fear out there, or that time value is about to be reduced hard and fast. I am using last nights numbers for this inflated example;
September Silver closed at $28.40 up $1.51
September Comex Silver Call Options; $26 Calls closed at $3.121
$27 Calls closed at $2.501
$28 Calls closed at $1.990
Let’s do some math; The $26 Calls are “In The Money” $2.40 (Strike Price – Closing Price). The difference between the “In The Money” (ITM) value and the “Closing Price” is what is called “Time Value” (TV), that equals 72.1 cents with every penny in Silver worth $50, which equals $3,605 in this example and for the next 19 days before these options expire.
$27 Calls closed at $2.501; $2.501 – $1.40 (ITM) = $1.101 or $5,505 of Time Value (and for the next 20 days)
$28 Calls closed at $1.990; $1.99 – 40 cents(ITM) = $1.59 or $7,950 of Time Value (and for the next 20 days)
These examples are not the only ones, in fact, this increased Time Value insanity goes way out across all months offered. Also, of note the deeper the Calls are In The Money, the less Time Value there is. These Option sellers offer the Calls to the buyers at much higher prices, this is how they keep from “melting up” the losses, as the prices rise. If the Comex price rises $1, the sellers of the Calls, may only lose 80 cents, as time goes by, and the prices rise, eventually the Calls become pure In The Money Valued as the Time Value slowly erodes to zero.
Buying cheap options used to be a thing, and now, no more. An example of a formerly cheap option is a December Silver $50 Call that was purchased for 4.5 cents ($225 for almost a years’ time) which was bought towards the first of the year before that dip to $11. That option closed at 65 cents yesterday and it’s $21.60 away from the Comex price and 110 days away from expiring. Of note, we have a new option strike price I haven’t seen since 2011, a December Silver $70 Call, which closed at 20.2 cents, yes that means $1,010 US$. This possibly means someone believes the price will exceed the 1980 price like Gold did in 2011, could this be another “tell”? In short, everything has changed, even the margins were raised a few weeks ago, and I think it may be possible to see a 100% margin at the Comex. That is, if things get real crazy. The reasons will only be found out in time, but from now on, it appears one will have to pay up in order to get in any trade regarding Silver and by natural extension, the money of countries and kings; Gold.
Let the insanity show that the changes in attitudes, towards the claimed relics of the barbarians, are now being sought by those who consider themselves more civilized (debt holders). Have a great weekend, keep your metals close, have a song in the heart, and as always ….
More J.Johnson content is available with purchase of a JSMineset subscription.