It’s The FedBugs Day In The Spotlight!

Posted at 9:14 AM (CST) by & filed under General Editorial.

Great and Wonderful Thursday Morning Folks,

       Gold is trekking lower in the early morning with the December Contract at $1,949 down $3.50 and recovering from the low at $1,944.20 with the high to beat at $1,963.30. Silver is down 3.9 cents with the December Contract at $27.565 after hitting a low of $27.23 with the high to beat at $27.81. Our US Dollar is trading higher with the value pegged at 93.12, a gain of 12.4 points after recovering from a drop down at 92.775 with the high nearby at 93.15. Of course, all this happened already, before 5 am pst, the Comex open, the London close, and just before the Virtual FedBugs day in Jackson Hole, Wyoming. Knock, Knock, Knock, Gold is Money!

      Gold in Venezuela is now priced at 19,465.64, more than doubling yesterday’s drop, gaining 251.69 Bolivar with Silver’s trade at 275.305 Bolivar, adding 9.438, more the quadrupling yesterday’s pull. Argentina’s Peso now has Gold valued at 143,851.60 providing the holder a 1,958.12 A-Peso gain with Silver adding 70.98 A-Pesos overnight with the last trade at 2,034.54. Turkey’s Lira now prices Gold at 14,312.98 proving a gain, just under yesterday’s drop, of 149.47 T-Lira with Silver now at 202.323 T-Lira almost tripling yesterday’s pull by gaining 6.346 overnight.

      August Silver’s Deliver Demands now shows a post of 13 fully paid for 5,000-ounce contracts waiting for receipts, and with no Volume or Price to post so far today. Yesterday’s delivery activity happened in between $27.02 and $26.955, with a closing price above any trade made at $27.43, a gain of $1.175 caused by all the Futures paper. Yesterday’s activity involved 13 more swaps and reducing the delivery count by 3. Of note; today is the last day to buy an August receipt before the Comex close which forces the sellers to deliver that receipt before the next month’s start. Silver’s Overall Open Interest is now at 183,575 Overnighters proving a reduction of 4,861 short contracts during yesterday’s stellar rally, leaving many to wonder what will happen next week when September’s Deliveries start up in earnest?

      August Gold’s Delivery Demands are still proving many want physical now with the count at 167 fully paid for 100-ounce contracts waiting for receipts and with a Volume of 2 up on the board with No Price offered yet. The count proves yesterday’s trades added another 6 contracts with the days physical trading range between $1,950.80 and $1,909.70 with a calculated close at $1,940.70, proving a gain of $28.90. I watched the last trade occur at the high. Before that last purchase the previous buy was at $1,926.60. It makes me wonder if the last trade was a “buy at market” order? In the old days, when there where floor brokers and trading tickets, we used to always hear them say “Never Give New York a Market Order”, this was the reason for that statement back then, and maybe now as well. Apparently, we still can’t trust the NY algos. Yesterday’s rally may have been a surprise for the sellers after they started to reduce their short papers the previous day, as another 903 contracts had to be added in order to provide cover bringing the Overall Open Interest to 550,512 Overnighters going against the physicals.

      Yesterday was something to behold as we watched the prices rally instead of getting the normal beatdown we almost always see on Options Expiration Day. In Silver, the $1.17 gain in price caused another 2,870 Call options to go ITM, bringing the total “In The Money” Call count to 25,141 purchased Call Options that may have required a futures trade to offset the loses, at or just before the respective strike price was breeched. Yesterday’s September Count was at 44,084 contracts in trade with the Volume, way up there above double. Today’s September Count now sits at 29,818 contracts proving a reduction of 14,266 contracts overnight. This may mean more than half of theses Call Purchases required the Call option sellers, to purchase those additional futures contracts, in order to offset the loses they were achieving as the prices rallied as the month progressed. As these options got cleared, so did the Open Interest on the futures side. Many may still think, options don’t matter, but we think otherwise, since it is major part of the Comex money game.

      Here’s a continuing anomaly; remember that December Silver $50 Call I wrote about earlier this month, that was purchased at 4.5 cents in the beginning of the year? Well, back on August 7th, the high spike in futures occurred at $29.915 (Sept), that very same Call option closed that day at 62 cents ($3,100). On August 12th, the lowest price in the September trade happened at $23.58, that very same $50 Call option settled that day at 45 cents ($2,250). With September Silver’s price now at $27.29, in between the high and the low for the month, that same Call options is now priced at 16.5 cents ($825). Go figure! Let us simply say, there is something of interest still happening at the Comex, with our precious metals.

      Will it mean anything after the Fedbugs day in the spotlight? Let us wait, with our physicals in hand, and a positive thought in the head, and a prayer for all. As always …

Stay Strong!

Jeremiah Johnson

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