Market Rundown

The dollar is down 60 points. Bonds are firmer somewhat. Stocks are up 90 and 150 bps. Gold is up $20. Silver is up 85 cents. Crude oil is up $2.00 and Nat Gas is down 38 cents. Crypto is mixed as are Grains with Soy up 1.7%

Why Silver and Gold are up

Authored by Goldfix

Silver is up 4.3% as we write this. No doubt the core cause is extreme nervousness on the part of Silver shorts given the relentless physical demand that is beginning to overwhelm the futures markets. Try not to get your hopes up for an earth shattering rally just yet. but, know this is a mini version of how it happens when it finally does. And the drivers that will accelerate the moves are moving into place.

Fundamentals

That is the main and fundamental reason (the one physical buyers have been patiently waiting on) for metals going up for the next 5 years as global markets reset monetary standards. But there are other important reasons for today’s and other recent moves tied to important factors.

So what are the “other” reasons for the Silver move today, aside from the fact that there is no Comex Silver available for the public?

Three Emerging Factors

The rally is in part a manifestation of the weakest and most vulnerable players in the market, the CTA and momentum fund shorts, covering in front of the Fed announcement tomorrow. There is always squaring up of some positions by nervous players before these events. But what is different this time of year involves 3 factors.

Categorically they are:

1. Macro

2. Seasonal

3. Structural

Macro/Monetary

This one is simple and you will hear from every major news outlet and bank report explaining why markets are doing what they are doing. Monetary policy affects macro outlooks which forces weaker, less capitalized hands to fold.

Fed interest rate policy is not conducive to creating risk, since the cost of capital is increasing. So, bye-bye punch bowl. Less money means less liquidity. Less liquidity means exaggerated moves. This works in both directions and cannot just be a go-to explanation for stocks going down. Traders fold earlier (stops tighten), faster (orders go to the market), and harder (they get out of the whole position) now. The second factor is Seasonal and somewhat mechanical.

Seasonal

First, it is end of year for some entities. Many funds close their books in November and thus those with risk on will unwind for year-end. Exit liquidity gets questionable as almost no-one is creating new positions now. And Silver shorts are closing now.

Lack of fresh money in the markets this time of year makes for even less exit liquidity. So markets can have exaggerated moves either way based on the urgency of the liquidators and the lack of players to take the other side of their trades. Continues here

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