Any obvious reason for todays big drop ? :flushed:
Eric King: “James, what are your thoughts on the gold and silver smash today?”
Turk: “Well, it’s another option expiry day, Eric. Today just repeats the pattern that we’ve seen time and time again over the past couple of years. At the end of the month in order to make as many of the call options expire out of the money as possible, you always see the price of gold and silver slammed on option expiry. And these are call options that are sold by the bullion banks....
I find this new range to be interesting, since we've been stuck at just over 19 for so long. I wonder if they are trying to habituate us to lower prices by jerking the price down and holding it there long enough to cause some paper holders to bail out. I can't really see the reasoning behind this other than to allow shorts to get the hell out before an inevitable explosion in price.
It has been nearly two weeks since we have had an updated report of what the current gold holdings are in the large gold ETF, GLD. We finally got one today.
The new number came in 4.2 tons below the last reported tonnage. GLD is now holding 782.88 tons.
That this is occurring against a backdrop of events in Iraq tells me that large traders/investors are using the current geopolitical rally in the yellow metal to sell.
I had remarked some three weeks ago that the first sizeable jump in gold holdings ( nearly 8.4 tons back on May 27th) was the first good news that gold has had in some time. What I wanted to see was whether or not this was the start of a new trend among Western-based investors or more or less a flash in the pan brought on by some value-based buying that was a one-off type of transaction.
From that point, GLD only added another 1.8 tons before today's fairly sizeable drop.
I do not think it coincidental that the drop occurred as gold hit a resistance zone on the price chart centered near the $1280 region. Obviously big sellers were lying in wait to take advantage of the short-lived spike in price set off by the running of buy stops in Asian trade Sunday evening here in the West.
Then things went from bad to worse after Espirito Santo Financial announced it has suspended trading in its shares and bonds due to its exposure to ESI, adding the decision was taken due to “ongoing material difficulties” at its largest shareholder Espirito Santo International, according to regulatory filing. ESFG says it “is currently assessing the financial impact of its exposure to ESI”. ESFG also suspends bond issued by fully owned subsidiary Espirito Santo Financiere. We will have the full, convoluted, org chart of Espirito Santo shortly.
Central bank intervention is pretty much the only thing people can rely upon any more.
... Swiss Bank UBS ... sees the potential for the price to rise as high as $1,580 by the end of next year. That's around 14% higher than its current price.
Recent Heavy Buying
Late last month saw some extremely heavy buying in the gold market that likely came from multiple sophisticated investors.
What we know is that the holdings of the SPDR Gold Shares ETF jumped by 34.93 metric tons, or more than 1.1 million troy ounces, on June 21. The increase, which was worth almost $1.6 billion, represented an increase of approximately 5% in the holdings of the fund.
While these figures might seem relatively small for other parts of the financial market, they are enormous when it comes to bullion, meaning it was likely the result of multiple buyers.
"It's huge and very significant," George Milling-Stanley, head of gold strategy at State Street Global Advisors, told TheStreet. "I believe there were a lot of different buyers that day."
He says the June 21 increase in holdings of the fund was one of the "largest creation days we've ever seen" and that "people who are buying gold at this level are probably smart."
In other words, the buying wasn't the result of small-time day traders jumping into the market.