Silver Diverges From Gold – Eric Dubin

The war in the silver Comex “pit” continues.  This is a highly unusual divergence:

When I saw the divergence start to develop, my first thought was that there might be speculators (insiders?) reacting to possible rumors about a possibility that Greece would be willing to sell some of her gold at some point in the future.  Today was a big day for both sides to lay fresh cards on the table, and a backroom quid pro quo along those lines isn’t inconceivable.  For now, I must admit that the longer today’s divergence persisted, the less plausible my idle speculation appeared to be.  But don’t be surprised if the Troika manages to shake some gold out of Greece at some point in the future.

In today’s “MIDAS” newsletter (click here for free trial), Bill Murphy speculated that the divergence could have been related to “…the unwinding of large long gold/silver spread trades.”  That makes sense, and it certainly will be interesting to keep an eye on open interest and Friday’s COT report for both metals.

Pinging Dave Kranzler via email, he quipped:  “I bet the disconnect between physical delivery demands on the paper that’s been issued is enormous.”  I couldn’t agree more.

Notice the “capping” just past the 16:00 hour.  Whatever is behind the action today, a resolute seller declared “no mas” at that level.

In any event, this is very positive trading in silver and continues the pattern I’ve been noting since the end of May.  Silver is once again demonstrating that pushing it below $16 is proving very difficult, indeed.  Intense volatility with an upside bias traditionally is a positive market development and usually telegraphs higher prices in the near future.