December Gold futures rallied on Wednesday posting a daily gain of $7.90. Silver again pushed through the 17.00 level again and made a new weekly high at 1726.5 before pulling back near the close to end the day session at 1713.5 basis December futures. Rumors out of Washington that spoke of top congressional leaders pushing back a possible delay in implementing lower tax rates for corporations, following a media report that Paul Ryan and his fellow Senate Republicans were exploring the option was one reason for the rally. While there was a brief dip in the Dollar and stock indices on the headline, gold and silver both retreated in the aftermarket with silver pressing the 17.00 level ,while gold was near 1280.0 in late afternoon trading. Gold continues to trade above the 200 day moving average at the 1262 level and with today’s close finished the session over the 100 day at 1279.1. However as the stock market recovered in afternoon trading to close near session highs, the upward momentum in metals faded. In my view, stock indices futures and the risk on vibe by investors that continue to push the equity sector ever higher has stymied any continued advance in metals in the last few weeks. It is the main reason the market has been range bound. Silver which can be much more volatile has maintained a range of 16.80 to 17.25. Gold’s recent range in my view is between 1265 and 1285. I believe there are reasons to turn bullish both metals but advances in the Dollar, all time highs in equities, and depressed values of the volatility indexes sometimes referred to in the trade as the fear index, have kept rallies muted at the aforementioned ranges.
If and I stress the word”IF”; the market hears more talk of delayed corporate tax reform well into 2018, I would look for metals to break out of these ranges to the upside. It is my belief that the Trump administration would have a major problem with Congressional leaders kicking the can down the road on tax reform. Stay tuned here. Those considering a bullish play in silver, may consider the following long term trade.
Christmas Tree in Silver. Bid 6 points upon entry. Trade cost $300.00 plus all commissions and fees.
Risk would be a futures close above 20.75 at option expiration in late February. Feel free to call me with questions on strategy here
Buy 1 of the March 18 Silver 18.00 calls
Sell 1 of the the March 18 Silver 19.00 calls
Sell 1 March silver 19.75 call.
Please join me for a free webinar focusing on the grain and livestock sectors each Thursday at 3 pm. Link for signup is below.