Many investors are likely wondering when the pain of the D-wave distribution will end in the gold and silver markets on yet another options expiration in April. The invisible hand which provided the paper fuel for the most recent decline has been reversing those positions into price weakness. The steady increase in real silver and gold lease spreads toward zero illustrates one aspect of this quiet repositioning (see chart 1 and 2).


Chart 1: Real Silver Lease Rates (1-Month LIBOR less 1-Month SOFO) and London PM Fixed Silver Price

Chart 2: Real Gold Lease Rates (1-Month LIBOR less 1-Month GOFO) and Gold Price, USD


Follow the money. When the invisible hand has reversed its positions of control as disclosed by signals in real leases spreads, DI readings in the futures and options markets, and ETF money flows the probability of market rally increases substantially. The public tends to be the only bagholder in the game of control.