Is the current fall based on free market supply/demand dynamics or are the spot prices being coerced down? Is the explanation below valid? "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. "
TPTB hate silver and gold, they set the market. Consider it a punishment for what lies ahead. No supply and demand dynamics, the paper market sets the price. More gold/silver is traded on the exchange than has ever existed on the face of the earth. Contracts are never fully settled. The market is their casino. My gut feeling is there is only so low they can push it. Personally i know there is less buying but there is virtually no selling of significant quantities at the moment. Perhaps it will end with either a pop to the upside or the close of market because physical demand at the lower end of the price range will overwhelm supply. There certainly is enough money out there to buy the entire supply. I haven't lost faith that silver and gold will be useful in the future. Even if I am wrong about the lows, I welcome lower prices to acquire more metal. I just might be able to afford my second ounce of silver... yay!
Options are a derivative market and does not effect spot price directly. The June forward comex gold market expired this morning and paper sell-off like this can persuade public sentiment. This is why gold has been hit harder then silver. Silver is same time next month. So yeah, I'd say an indirect effect.
I figured someone just opened up a room and found it full of gold and silver they had forgotten about, flooded the market. Other than that, what other possible explantion is there?
Just an unverified personal theory, but I think it's one of those ancient Norse gods (who were mostly known for drinking, fighting and screwing) who's now having a grand time screwing with stackers by wreaking havoc on PM prices. I think it's Freyja. She was the ancient Norse goddess of love, sexuality, beauty, fertility, gold, war and death. Since the price of gold is undergoing a type of death, that's two of her domains. This mess has her fingerprints all over it.
Serious? The macro data out of the US last night relating to durable goods, services PMI and housing price index came in better than expected or had been revised upward from the previous recordings which was positive for the US economy and hence the US dollar which of course was bad for gold. US GDP figures, jobs figures and monthly housing figures are out Thursday night our time if you want to know why it suddenly moves one way or the other.
Further to what Caput was saying on this thread I think Greg Canavon at Daily Reckoning covered it well (See excerpt below) A lot do think that options expiry dates do have much to do with the timing of gold plunges. I do - I always favour conspiratorial theories about bank activities. The idea being that by pressing the gold price down suddenly the shorters selling options will be rescued from paying out and the buyers of options don't have time to get out. Someone might have a better explanation. "The Move We've Been Waiting For Wednesday, 28th May, 2014 By Greg Canavan Gold goes down --Well there you go. Gold made the move we've been waiting for last night. It went down, falling about US$30 an ounce from the previous session. The reason given for the fall was stronger than expected US data durable goods orders and consumer confidence readings improved and an easing of tensions in Ukraine. --This was just the excuse the market needed to break lower. It had been trading in an increasingly tighter range these past few weeks and the pressure was building. It only required a few marginal data releases to push it either way. --That they all seemed to arrive on the same day was just what the bears were after. The bulls capitulated. When the selling took prices down to US$1,275 (previous support) it triggered a whole bunch of stop-loss selling, which pushed prices down further. It was also options expiration day for the June contract, which added to the volatility. --Now that prices have broken to the downside of the recent trading range, we would expect to see the gold price continue to fall in the short term. This is really just a prolongation of the 'bullish on central banks, bearish on gold' trend. --Another 'reason' given for the advance in equities overnight was the expectation of monetary easing from the European Central Bank. After all, boss Mario Draghi all but promised it at his last press conference. --For now, then, the general mood is pervasively bullish*. While there are all sorts of reasons to be bearish in the longer term (like, um, you can't print your way to prosperity) in the short term this just doesn't matter." * He means for the US economy, dollar, and stockmarket
Draghi has painted himself into a corner with last months ECB meeting saying he would act in June if need be. The data since then has been poor out of Europe so the markets have been pricing in some form of easing and the Euro has been dropping against the dollar. I think the markets will react badly if he does try to jawbone he's way of it and I don't think negative interest rates on deposits are going to do the trick. The markets want Euro QE
Because the Chinese told the boys at JPM, that if they wouldn't crash the price, then they would cut their effing heads off...eh heh.
And btw, if this is a freefall, how do you call $5 and even $10 and even $20 in a day or a couple of days then? Every price dollar represents a certain amount silver. That doesn't change with the price, a $50 to $45 drop is a same amount extra sold as a $25 to $20 drop. What is it at present day? Alike $0.5. So 'free fall', come on.
