Gold is getting trashed today, and that’s not surprising at all once you look at the calendar.

May 25, 2022

Dear Fellow Investor,

It’s like clockwork: Near the end of every month, speculators manipulate the futures and options markets for gold and silver, sending the prices plummeting.

It’s happening again today, as you can see:

As I write, gold’s down about $20, or a little over 1%, while silver’s dropped about $0.22, also representing about a 1% loss on the day.

Things looked better yesterday, with the yellow metal gaining about $13 and continuing the rebound that I’d talked about on Monday in this letter. I was a bit cautious in my comments then, warning that we could see more selling in the metals if/when the stock market tanked once again.

Today’s action isn’t what I was talking about on Monday. In fact, the other major asset classes and indices — stocks, yields and the Dollar Index — are all fairly flat today.

No, what’s moving gold and silver down today is simply the calendar.

I’ve reported on this before, featuring the chart below showing month-ends and Fed meetings against the gold price.

As you can see, the gold price often dives around Fed meetings and as the end of each month nears, and often experiences a very sharp rebound following these price declines.

The reason is, simply, the flow of bets on the paper gold and paper silver markets — the futures and options exchanges.

As the contract expiries loom, speculators often dump the metals to make their shorts profitable or their straddles more profitable. That’s exactly what’s happening, again, right now.

One of the best experts around today on this phenomenon is Craig Hemke, who writes the TF Metals Report, in addition to a column for SprottMoney.com. I highly recommend Craig’s work and his service.

Specifically, one of his recent columns does an excellent job of explaining the games being played by speculators who place straddles in the market.

The bottom line is that today’s action in the metals is not at all surprising.

In fact, when I fired up my computer this morning to check my email, I saw that a friend of mine who is one of today’s most experienced market watchers and technical analysts had sent me a message with the subject line: “Calendar.”

The message was simply a link to the CME Group’s futures and options expiry calendar.

Not coincidentally, clicking on that link shows that the last trade date for the June 22 gold options is today, while the futures last trade date is tomorrow.

The lesson is to expect this kind of trading action in the metals, unless there’s something much more powerful at work to overwhelm these games.

And also: Use these selling events as buying opportunities, because the record shows gold and silver usually pop right back up.

All the best,

Brien Lundin
Editor, Gold Newsletter
CEO, the New Orleans Investment Conference