You may recall that we caught an interesting new wrinkle in the COMEX gold trade late last year and again late last month. And now we're seeing the same thing in COMEX silver. Uh-oh.
OK, so we first wrote about this back in November. A member at TF Metals Report had noticed an unusual surge in Trade At Settlement activity in COMEX gold just before the Dec21 contract expirations below is a link to that November post and a reminder from the CME as to what "Trade at Settlement" actually is.
So how did this play out? Ahead of the Dec22 expirations at the end of November, the period between the 5th and 11th of November saw TAS volume in COMEX gold surge from the usual/normal volume of 2,000-3,000 contracts per day up to in excess of 30,000 per day. In fact, just those five trading days of November 5-11 saw a total of 172,254 contracts traded this way before daily TAS volume receded back to "normal" on November 12.
- November 5: 29,966
- November 8: 33,352
- November 9: 38,169
- November 10: 39,310
- November 11: 31,457
The current theory is that these end-of-day trades were likely placed as spreads, which were then "legged out" for maximum price impact ahead of Dec21 option and contract expirations in late November.
So having noticed these shenanigans in late November, we were on the lookout for the same type of stuff in late January ahead of the Feb22 COMEX gold expirations. And guess what? Here was the same pattern. The TAS volume surged early in the month and price collapsed late in the month. In trying to warn everyone, wrote about this on January 18:
And what were the specifics? Trade At Settlement volume again went through a 5-day surge to over 10X the usual totals. See below:
- January 7: 32,504
- January 10: 31,872
- January 11: 33,364
- January 12: 35,264
- January 13: 32,534
And how did the price react ahead of the Feb22 option and contract expirations later in January? See for yourself:
So what's the point of today's post? Well, given what you've just read, it certainly seems that we're onto something and that The Banks have found a new way to influence price ahead of front/delivery month option and contract expirations. It seemingly worked so well, that now they're giving it a go in COMEX silver.
Remember, March is NOT a delivery month for COMEX gold. However, it IS a delivery month for COMEX silver. The Mar22 COMEX silver options expire and price at the COMEX close on February 23 and the contract "expires" and goes off the board into delivery on February 25. Ahead of this, look at what has just taken place in COMEX silver Trades at Settlement.
Two things first:
- Just like COMEX gold, the usual/normal volume for COMEX silver TAS is very low. The total volume is often less that 1,000 per day.
- The surge on COMEX gold TAS began on November 5 and January 7 or about three weeks before the Dec21 and Feb22 expirations.
OK, with that in mind, check the latest volume in COMEX silver Trades at Settlement:
- February 7: 8,271
- February 8: 10,570
- February 9: 9,745
- February 10: 10,410
- February 11: 10,902
And just like COMEX gold in November and January, the price of Mar22 COMEX silver has been rallying through the period of this surge in TAS:
So what happens next? Well, given what we've seen recently in Dec21 and Feb22 COMEX gold, I'd say that odds are pretty high that Mar22 COMEX silver contract is headed back to $22.40 or so by the time the options expire and the contract goes off the board next week.
Of course, it's possible that geopolitics will intervene and thwart this latest Bank exercise in managing price. It's also still possible that, as we wrote back in January, this is all nothing but coincidence and happenstance.
However, if the price of COMEX silver pulls a full round trip next week, we may be able to say with confidence that we have uncovered the latest Bank price manipulation technique and this is certainly something that will be helpful again next month, ahead of the Apr22 COMEX gold expiration schedule.