From Adrian at Midas 5/22/09

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As of May 15 the total Open Interest across all strikes was 118,764. As of May 21 with only 5 days remaining to expiry the Open Interest stands at an astonishing 115,551 contracts. The Open Interest that is in the money at $950/oz is 42,158 whereas on May 15th it was 44,644. This means that there has been almost no selling or exercising of these options as of today. If these options were to be exercised for futures contracts and the holders stand for delivery in June then this alone would be twice the gold inventory that the dealers have on the COMEX! That should be a sobering thought for the shorts!

If gold moves to $1000 in the next 5 days 60,000 option contracts will be in the money and if it were to go to $1100 then 75,000 option contracts would be in the money.

It is simple to see why the $940 in gold was so fiercely defended today. The breaking of key resistance so close to option expiry is the Cartel’s worst nightmare. From looking at the action it seemed to me that there was a very big buyer taking on the Cartel. The volatility was remarkably low. Who ever was buying was not pushing the market but was buying everything that was being sold.

This is a battle of epic proportions and it seems that the cavalry has arrived on the side of the bulls!

Cheers

Adrian