GOLD AND SILVER CONTINUE TO TREND HIGHER IN THE OPTIONS EXPIRY PERIOD

The options expiry period saw gold and silver advancing substantially instead of the expectations of takedown by the bullion banks.

However miners lost some ground despite the gold and silver advancing. Most likely many traders see this as an opportunity to cash out the miners which have risen substantially over the last 2 months.

Some blamed a takedown in the gold ETF, GLD by institutional funds to jolt the confidence in gold and silver to stem the rise of the precious metals further, which also impacted the miners as well.

Nevertheless, a correction is good for the miners as they have been on a tear recently. Last year, the bullion banks together with the BIS sold more than US$10B worth of gold to knock gold off from its high in the US$1,300 - US$1,360 range but gold continue its advance. Is it money wasted?

Somehow I tend to believe that each attempt to suppress the price of gold and silver requires an even greater amount of shorts to cover the previous shorts, which becomes a growing vicious cycle and put the banks in dangerous positions. On top of that, each major short will emerge a major buyer who will demand physical gold in delivery, gold which the western banks do not have. In the previous takedown after the election, it was rumoured that the major buyer was the PBOC.

Why do I say that the western banks have little physical gold left? The Bundesbank of Germany reported that they have repatriated most of their gold back into the country but the gold bars have to be recast. Recast? Because the gold bars that they received belongs to others while those that they sent for safekeeping are no longer available in their original form. This is a clear sign that the western banks are running short in physical gold.

In the past few months, hundreds of tonnes of gold have moved from the western banks vaults to Switzerland where they are melted and recast into kilobars before being sent to an eastern nation, most probably China, in which case supports the theory that China has emerged as a major buyer during the preivous takedown. It will be interesting to watch next week as

Trump will be addressing the Congress on Tuesday, the option expiry on Monday for the COMEX and LBMA option expiry on Tuesday.

A looming debt ceiling debate in March could set the tone for the US economy and Trump's economic plan.