Loading ...Bill,
When it comes to gold and silver trading “anomalies” are about as common as it gets. There’s hardly a day that goes by without some kind of counterintuitive movement, clockwork selloff, and technicals-defying resistance point. The latest “anomaly” comes in the form of a sudden state of torpor in the price of the metals, along with their open interest.
For example when Dec. silver hit $19.67 on Sep. 5 its open interest was 216,682. Fast forward a month later and by October 1 silver had plunged $2.47, a decline of 12%, to $17.30, yet the open interest barely budged, winding up at 212,266. It’s odd to say the least to have such dramatic changes in the price of a commodity with little volatility in OI. In fact silver OI has stayed between 210-218K for almost the past 2 months. We’ve basically been in a silver open interest coma since early September. Lately daily changes in OI have been as little as 1K or less. Why the sudden coma after an entire summer of volatility in both price and open interest? What change occurred to provoke such sudden dispirited action? It certainly wasn’t a sudden turn in fiscal or monetary discipline. In fact, QUITE the opposite.
In the past 2 months we’ve witnessed alarming Fed overnight repo action, and no matter what they call it, a new QE op, along with ongoing trade/Brexit turmoil. Gold and silver should be pushing onward and upward, both from a technical AND fundamental perspective. The only reason for this sudden coma in both price and open interest is a cartel lockdown. As always the physical market will tell the tale as to whether it can be sustained. The summer of 2019 was distinctly different from the past 7 years. The smoke signals were clearly visible. Nothing has changed, other than the smoke getting temporarily doused.