Gold Falls Again on Options Expiry –Supported by Global Debt Crisis & Iranian Oil Jitters

Tyler Durden's picture

Submitted by GoldCore

Gold Falls Again on Options Expiry –Supported by Global Debt Crisis & Iranian Oil Jitters

Gold is trading at USD 1,696.10, EUR 1,252.60, GBP 1,083.30, CHF 1,546.20, JPY 130,370 and CNY 10,780 per ounce.

Gold’s London AM fix this morning was USD 1,697.50, GBP 1,083.90, and EUR 1,253.14 per ounce.

Yesterday's AM fix was USD 1,704.00, GBP 1,085.42, and EUR 1,266.44 per ounce

Gold in USD – 6 Months (Daily) and 2 Most Recent Gold Options Expiry (09/27/11 and Today)

Gold is higher all currencies today and is up 1.2% in USD and 0.75% in EUR after yesterdays 2% falls and there are renewed reports of physical buying activity in Asia.

Yesterdays falls may been margin driven and have been liquidation by speculators and investors covering losses elsewhere due to the renewed market volatility and losses seen in equity markets globally in recent days.

Gold in USD – 30 Days (Tick)

Recent years have seen a trend of gold and silver selling off aggressively in the run into options expiries. This pattern has been less marked in 2011 but was more frequently seen in recent years.

Investors have complained to the CFTC about violations of law in the gold and silver markets and some have sued JPMorgan Chase & Co and HSBC Holdings Plc accusing them of conspiring to drive down prices, and reaping an estimated hundreds of millions of dollars of illegal profits.

The sell off had all the hallmarks of a bear raid by concentrated leveraged shorts as the news flow was extremely gold positive – both from Europe and the US.

This most recent sell off may again be completely coincidental but the CFTC might want to keep an eye on such unusual trends in the precious metal markets in order to ensure fair and free markets and protect the interests of all investors.

Such sell offs, whether manipulative and manufactured or not, should be used to accumulate physical bullion by buying the dip.

The US Supercommittee’s abject failure to make any progress regarding the US budget woes yesterday is very gold bullish.

Gold in USD – 1 Year (Daily) – 50, 100 & 144 DMA

Asian retail, high net worth and institutional buyers and central bank buyers will take advantage of this latest correction and buy the dip as was seen in September.

Besides the ongoing global debt crisis, gold will also be supported by increasing geopolitical tension between Iran and Israel and its allies the US, Britain and Canada.

The US, Britain and Canada announced yesterday new sanctions on Iran's energy and financial sectors.

Iran and its powerful ally Russia criticized the new Western sanctions imposed on Tehran saying they were illegal and futile.

The unilateral measures against Iran's financial, petrochemical and energy sectors sanctions were "unacceptable and against international law" according to Russia.

China had blocked any possibility of the steps going before the UN Security Council for approval. China is a major buyer of Iranian oil and a key investor that has stepped in to sign energy contracts left available by departing European companies.

Iran has warned it could close the strategic Straits of Hormuz if it became the target of a military attack. The straits are the entrance to the strategic Persian Gulf waterway, a major route for the supply of oil globally.

Oil has risen for the first time in four days as the sanctions against Iran raise concerns that supplies may be disrupted. Prices have gained 7% this year after increasing 15% in 2010.

A disruption of Iranian oil supplies would lead to oil prices surging and to increased safe haven demand for gold.

For breaking news and commentary on financial markets and gold, follow us on Twitter

NEWS

(Bloomberg) -- Gold Rebounds From One-Month Low as ETP Holdings Gain to Record
http://www.businessweek.com/news/2011-11-22/gold-rebounds-from-one-month...

(Reuters) -- Gold rebounds; Europe, U.S. debt worry weigh
http://www.reuters.com/article/2011/11/22/us-markets-precious-idUSTRE7AK...

(MarketWatch) -- Gold futures rebound in electronic trading
http://www.marketwatch.com/story/gold-futures-rebound-in-electronic-trad...

(Reuters) -- Russia Says New U.S. Sanctions on Iran 'Unacceptable'
http://in.reuters.com/article/2011/11/22/idINIndia-60659320111122

COMMENTARY

(CNBC) -- Go for Gold: Cramer Bullish on Bullion
http://www.cnbc.com/id/45390935

(ZeroHedge) -- So, Wait, Gold Is NOT Outperforming Stocks By 23% YTD?
http://www.zerohedge.com/news/so-wait-gold-not-outperforming-stocks-23-y...

(KingWorldNews) -- Turk - MF Global Disaster to Create Another Lehman Crisis
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/11/21_T...

(KingWorldNews) -- Embry - Get Ready for Extreme Money Creation Globally
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/11/21_J...

(GoldSeek) -- The New Price Era of Oil and Gold
http://news.goldseek.com/GoldSeek/1321895391.php

(Market Oracle) -- Euro-zone Will Print or Perish
http://www.marketoracle.co.uk/Article31651.html

(Nine News) -- $200 Oil in 2012?‎
http://finance.ninemsn.com.au/article.aspx?id=8378120

(Press TV) -- China's Banks Use Gold as Legal Currency
http://presstv.com/detail/211132.html

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Carlyle Groupie's picture

Bring it. I need to plan a trip to Canada to get some more!

International Christmas shopping.

sabra1's picture

while you're in canada, check out our fine selection of non-bubbled real estate!

paarsons's picture

Gold never does well in a deflationary environment.

To the gold bugs.  Be careful.

If someone--like Gingrich--gets in and has the balls to support another Paul Volker, you'll lose your shirts.

The FED Window can't stay at zero forever.

Don't kill the messenger.

http://fucklloydblankfein.blogspot.com

 

Nate H's picture

gold has almost always done well in inflationary environments, at least back to mid 1800s in USA.  This time could be different, but read some history/data before making such claims.

grey7beard's picture

>> done well in inflationary

Excrept he said deflationary. 

Pladizow's picture

When guaging an assets performance, especcially in a deflation, it is important to view it against its alternatives.

And as all assets suffer in a deflationary environment, he who loses the least, wins.

Gold will suffer the least and has historically outperformed other asset classes in a deflation.

What I'm not sure of is how it fairs against cash?

But who says there will be deflation?

The Monkey's picture

Umm. Actually, the dollar and long term treasuries will not suffer at all.

BigJim's picture

Cash doesn't do too well if they virtually confiscate it by bringing out a new currency.

Property/shares/savings can and probably will be confiscated through 'wealth' taxes.

Physical gold & silver make a compelling case in a world run by thieves.

Doña K's picture

Here are the facts this time arround.

In a deflationary environment cash is king. Provided that cash is in a currency which is stable. Since this is not happening anytime soon, see below:

  1. Foodstuff and related assets with little or no taxation
  2. Gold as a wealth preservation and medium of exchange for large purchases
  3. Silver as a medium of exchange for hard to get items and medium size purchases.
  4. Cash du jour as a medium of exchange for small everyday purchases

 

Quintus's picture

"Gold never does well in a deflationary environment."

Evidence?

Clearly the gold price was officially fixed during the Great Depression, but if you look at the closest thing people could buy at the time (Mining Stocks) they shot hundreds of percent higher.

Quintus's picture

Either that or someone with not too much going on upstairs.  In an environment where a 2% rise in Treasury yields would bankrupt the US, he thinks someone is going to do a Volker and raise rates to double digits?  Yeah.  That'll happen.

Smiddywesson's picture

Gold never does well in a deflationary environment.

1.  I hear that's not true, but even if it were, deflations make a currency stronger, not weaker but we are clearly in a debasement and default environment.  That completely invalidates the inflation/deflation argument, sort of like arguing about the ship's course while the engine room is on fire.  The course we are on is irrelevant, the USD will be destroyed before you arrive at deflation land.

If someone--like Gingrich--gets in and has the balls to support another Paul Volker, you'll lose your shirts.

2.  The risk of financial responsibility taking over is zero.  Gingrich isn't as much of a conservative as you seem to think.  He is criticizing the Wall Street protests without one word about the Fed.  You won't see any responsible actions from either party.

The FED Window can't stay at zero forever.

3.  True, they can't raise interest rates, but they are saying they will stay at zero forever.  What does that tell you about where we are going?  Refer back to point #1.

Threeggg's picture

4. The nature of CDS when triggered through deflation will create hyperinflation, because the money to cover the defaults does not even "exist"..............yet.

Rip van Wrinkle's picture

Someone with balls in Washington?????

 

Get a life!!

bernorange's picture

Fed can't raise interest rates like Volcker did.  The interest on the debt would explode.  They are trapped.

If Ron Paul gets in and supports Jim Grant and HR 1098, sound money has a decent chance. 

Temporalist's picture

But then gold and silver won't be taxed and made as competing currency, legal tender they likely would go even higher.

Bansters-in-my- feces's picture

 @ Paarsons  ...Just wondering why all the care and concern to warn the GoldBugs.

Are you the motherly type ?

Or a Banker.

or#3 a fucking idiot.

or#4 all of the above.

 ?

fuu's picture

A re-purposed Celente forum pimp.

fonestar's picture

I guess consistent smack-downs at the open and after trading hours constitute deflation these days?

SilverIsKing's picture

"This most recent sell off may again be completely coincidental but the CFTC might want to keep an eye on such unusual trends in the precious metal markets in order to ensure fair and free markets and protect the interests of all investors."

Hilarious!

sumo's picture

Oh yes *choking on my coffee*, the CFTC is wery wery interested in any wascally behavior. CFTC will investigate, wight after it finishes investigating the silver market *wink* ... Weal Soon Now ... staff shortages *cough*, you know how it is ...

Don't you worry, Mr and Mrs Investor, your money is safe and securely held. Just not by you.

LongBallsShortBrains's picture

I considered junking you for not finishing with

" Be vewy vewy quiet, I'm hunting manipuwators ".

Ah fuck it. Green arrows for you. It's almost Christmas.

Manthong's picture

If you give the CFTC the benefit of the doubt that they are not criminally complicit, this might be a good way to look at them..

http://www.youtube.com/watch?v=8105U1WY9ro&feature=related

Oh.. and I said IF.

 

StychoKiller's picture

Awfully easy to ignore things when you're being paid to ignore them...

johny2's picture

caught beetwen US debt crises, Euro debt crises, Japans debt crises, Middle east crises and Asias population crises, I would suggest it is time to buy some physical PM and hope it doesn't get irradiated.

The Monkey's picture

When everybody is on the same side of the trade... Gold took on the proportions of a mania and I won't be surprised if / when the long-term channel breaks to the downside. Same for sillver (but probably worse).

johny2's picture

When you mention everybody being on the same side of the trade, I think of all these people who believe in FRN. 

fonzanoon's picture

Maybe...just maybe for 5 minutes a few people stuck their toe in the water with silver and it got bit off in April. No one owns silver. It may go down.  But no one owns it. Obviously people on here do. But not the public.

The Monkey's picture

Hehe. I remember some sad story the WSJ ran (when silver was topped out of corse). Some lady living in a trailer park said she had traded all her retirement cash for physical silver. "I've never been so sure of something in my life.".

BigJim's picture

"Hehe"? At an old woman losing 40% of her savings?

What an asshole you are.... even if her loss is temporary.

Temporalist's picture

Just because the story came out during the recent top doesn't mean she purchased at the peak.  She could have bought at $15, $20, $30 and still be quite fine.

Smiddywesson's picture

I won't be surprised if / when the long-term channel breaks to the downside. Same for sillver (but probably worse).

Sure, if we weren't physically pinned to ZIRP by unsustainable debt, and an asteroid of derivatives as large as the moon were not speeding towards us, and all of the world's monetary and financial system wasn't chained together waiting for the weakest ship to pull all the others under, I could agree with that, sure.

The Monkey's picture

Good luck brother. I didn't make 3700% compounded returns over the past 8 years lined up on the same side as the rest of the world.

fonzanoon's picture

If that is the case you must be getting killed shorting treasuries like I am. It is tough to wait it out but it will work out. It takes balls to take the other side of the trade. Easier to own a bond fund like the rest of the world.

The Monkey's picture

Long treasuries have been the ultimate contrary trade this year. Bill Gross was even shorting them when the sky was falling in April. No sense closing a position before it finishes it's run.

fonzanoon's picture

For a few traders maybe it has been contrary. Bill Gross was agnostic and then maybe slightly negative for 2 days. Jim Rogers presumably got hammered.  For the trillions of dollars in retirement plans, annuities and even brokerage accounts they are all massively invested in bond funds. My point is people actulally own treasuries. Nobody owns precious metals. Central Banks and Paulson.

The Monkey's picture

Long term treasuries have been just about the best investment out there for years. They have always been a contrary trade (except for pension and life insurance). All these years we were told to ladder bonds to diversify interest rate risk.

fonzanoon's picture

I totally agree with you about it being a fantastic trade. It has been a home run. I just disagree that it has been contrarian. Everytime someone gets nervous they switch to a bond fund. Gold gets talked about a lot. No one actually owns it. It's just a fact.

devo's picture

Somewhere between 2 and 5% of people own gold. Hardly the "same side as the rest of the world."

Temporalist's picture

It's more like 1% at most 2% but still off the 4% that it was as an investment class back just 30 years ago until the 90s when people started preferring bubbles like dotcoms then housing and now the ultimate bubble govt. debt and fiat all because "analysts" and "professionals" direct people's money there now in 401ks and pensions and annuities...people don't even think (invest) for themselves they let someone else do it for them and the managers of their assets don't go into gold because they get no kickbacks for it.

Kina's picture

Investors have complained to the CFTC about violations of law in the gold and silver markets..

Complaining to the CFTC about the banking cartel's gold and silver manipulation is like complaining to the Mafia about extortion.

 

CFTC's sole purpose is to help the banking cartel rape America. And they have done a good job.

 

Kina's picture

Investors have complained to the CFTC about violations of law in the gold and silver markets..

Complaining to the CFTC about the banking cartel's gold and silver manipulation is like complaining to the Mafia about extortion.

 

CFTC's sole purpose is to help the banking cartel rape America. And they have done a good job.

 

Bazinga's picture

If you are a believer in gold/silver, use options expiry to increase your positions. Options Expiry=DIP!

The Monkey's picture

"Believer" is the key word.

akak's picture

Several thousand years of monetary history, and hundreds of examples of both profligate governments and debt-loving central banksters destroying the value of their fiat currencies and the savings of their citizens, can indeed lead one to some well-founded "belief" in gold and silver.  But have fun playing in the corrupt and rigged casino that is Wall Street and sovereign debt --- for as long as it continues to last.