Eric Dubin & The Doc break down the trading action in gold and silver and preview next week’s options expiration in the metals.
We discuss the implications of the Cyprus bail-in, whether bank runs are imminent in Greece, Italy, & Spain, and the likelihood that a full-blown contagion has been triggered due to the loss of confidence in the banking system.
SD Weekly Metals & Markets is below:
Gold & silver price Re-cap:
Silver closed at $28.76- basically unchanged for the week
Gold closed at $1609, up roughly $25 for the week
Signs of probable SILVER short covering w/ Thursday morning pop higher on Comex open; GOLD was moving higher earlier in the week on fear of banking sector contagion
Friday trading: Can’t have strong trading and testing of GOLD’s upside resistance at $1620 and $29.50+ SILVER going into the weekend and with Cypress still unresolved; GOLD hit before COMEX open; SILVER hit on COMEX open – probably new shorts.
SILVER has three tests of $29.50 in the last two months, each failing a few pennies lower each time; meanwhile, the bottoms are rising a few pennies higher each time. Range tightening. Normally, given fundamentals, one would expect upside breakout but….
SILVER Options Exp. Next Week: Heads-up, short-term!
-Banks closed through at least Tuesday
-ECB enacts capital controls, will keep Cypriots savings accounts frozen even when banks re-open, and reduce ATM withdrawals
-Cyprus as Lehman Brothers & MFGlobal rolled into one
– Spain, Portugal — bank runs next week?..
Jim Sinclair Meeting
-Cyprus a major misstep for the IMF/ECB
-Western Central banks testing policy shift from quantitative easing to bail-in wealth taxation.
-Spain has reportedly just changed constitutional rules to allow depositor haircuts
-New Zealand is attempting to pass legislation that depositors would see haircuts in all future bank failures
-2 years to withdraw funds from IRA/401k
-silver to pass $100, will not reach $500, will have an orgasmic like rally and subsequent crash; SILVER not monetary metal per Sinclair and on this score, he’s wrong and silver will not likely crash – just huge volatility.
FMOC meeting: Same old MOPE story
note 4 year pattern of stronger econ in 1st half
-Uncle Ben: “green shoots” mid 2009
-Uncle Ben: “we have exit strategy” WSJ editorial, summer 2010
-same pattern this year – strong in first half
-QE programs primarily launched Fall/Winter
-2013 Economic slowdown later in year
-Exit strategy: nothing but jawboning given Fed purchase of over 50% of Treasuries