Gold's Swan Song if Nothing Happens?

Published here: http://www.zerohedge.com/news/2017-04-14/golds-swan-song-if-nothing-happpens

Golden Caveat: Weekend Event Risk

via MarketSlant

If nothing happens, Gold could have a serious correction. And odds are
nothing will happen. And that could mean a retracement to $1255 or lower
in a heartbeat.

That doesn't mean the world has resolved its
problems. It simply means that once again, hot money that thinks gold is
a deeper market than it is will trample itself and bonafide investors
as they run for the door.

The other concern we have is that
Silver, while powering through most of the producer related hedging, did
not settle above $18.55

From a previous post 

Silver Still Not Out of the Rough

“[Silver] producers typically hedge concurrently. For the last few
weeks, we saw that many producers had sell orders in the $18 area,”
Lanci said.

He went on to add more caution, “Based on our industry contacts and a
large sale of June $21.00 calls in February before the $18 level wash
out soon after, we do not think silver will breach $21.00.”

He added that banks know about these orders and are tempted to sell
ahead of producer hedges. “This is a recipe for a violent rejection
lower, as we are seeing today. But it is not the first time.”

Above $1854 Should be a Rocket Ship Ride

According to Lanci’s research, silver has a tendency of rejecting the
$18 area “quite violently,” although he added that “rejection” does not
always mean lower prices.

“If too many shorts front-run the producer sales, and an event like
Brexit occurs as in July 2016, the rally can be a disaster for shorts.
When silver pushed back to $18 in July 2016, those producer hedges were
gobbled up by fresh money and the shorts were bagged and tagged,” he
explained. “There was little to stop silver from rallying as high as it
did. That was a bonafide short squeeze by players who got cut front
running producer hedges.”

The fact thatSilver has not  cleared the $18.54 area gives us serious pause. it suggests that more hedging lingers right here.

Combine
that with the tendency for Gold to get frothy before known events and
then wash out afterwards, and you should be careful.

Gold Likes Surprises, Planners Get Trampled Underfoot

We
like to see surprise events drive gold. Events like Brexit.  We are not
fans of people plowing into Gold in expectation of  weekend holiday
worries. 

The increase in option related hedging in Gold gives us
encouragement. This is a sign of longer term commitment to the actual
underlying. But for every guy that hedged, there are 2 that will puke if
the market starts to wither.

Just be informed. An event that is known about rarely pans out in Gold. 

Good Luck

VBL

About the Author:

Vince
Lanci has 27 years’ experience trading Commodity Derivatives. Retired
from active trading in 2008, Vince now manages personal investments
through his Echobay entity. He advises natural resource firms on market
risk. Over the years, his expertise and testimony have been requested in
energy, precious metals, and derivative fraud cases. Lanci is known for
his passion in identifying unfairness in market structure and uneven
playing fields. He is a frequent contributor to Zerohedge and
Marketslant on such topics. Vince contributes to Bloomberg and Reuters
finance articles as well. He continues to lead the Soren K. Group of
writers on Marketslant.

Twitter: VlanciPictures

Website: Echobay.com

Email: vlanci@echobay.com

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