Interesting article, especially as CTO now appears to be a silver producer also:
4/29/2009 Adrian Douglas - BIG MONEY MOVING INTO COMEX GOLD & SILVER CALL OPTIONS
I conclude that smart money is being placed for a massive rise in the gold price in the next 30 days and silver in the next 60 days (which probably means within 30 days for both metals) and again by December. I wouldn’t be surprised to see a pullback in between the two events. This money could not go in to the futures market without blowing the lid off the price as it would represent such a large increase in open interest. Going into the out-of-the-money option market allows flying below the radar.
The CALL/PUT ratio on the stock market is usually a contrarian indicator because the average, unsophisticated retail investor will buy options and the average retail investor gets it wrong and chases the market move most of the time. Only sophisticated traders tend to be in the precious metals option market so when there is a huge build up betting on a particular direction that is typically a directional indicator as I have shown was the case for the last two big moves in the precious metal bull.
The flat contango in gold and silver suggests there is a shortage developing of precious metals for delivery. We know that two large banks hold almost 100% of the commercial net short position. They need desperately to cover their exposure if the market is about to make a big move. It looks as if that is precisely what is happening.
