Friday, May 5, 2017

Either Way The Gold Price Soars

They either fail to deliver, which will send the price of gold soaring as people everywhere move out of paper representations of gold into physical metal, or they cover their shorts by buying physical metal in a tight market already starved of physical metal, which would also send the price of gold soaring.

I’ve mentioned before that one of these days leading into option expiry, the delta-hedgers are going to be forced to scramble for cover. We are getting closer to that moment, so we need to start thinking about June contracts expiring at the end of May. The clue will be to watch how the spot price compares to June delivery and whether a deep backwardation develops, which brings me back to silver.

As if all of this about gold wasn’t bullish enough, there is the obvious strength in silver. The shorts can’t get it below $18. It is solid as a rock, so we may see a short squeeze in silver when the May futures go to first notice day and the May options expire at the end of this month.

- Source, King World News