September Fed Meeting still Opportunity for Silver Option Sellers




September Fed Meeting still Opportunity for Silver Option Sellers James Cordier’s Market Update for August 29, 2016 –
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(Audio Transcript)

Good afternoon, this is James Cordier of with a market update for August 29th. Well, in the last couple weeks we saw gold and silver finally knocked off its perch as the idea of no inflation, low commodity prices everywhere, and a very stable stock market have caused some people to cash in their chips on the two precious metals. The gold market was pushing up towards $1,400 and everyone was bullish. The silver market rallied up to $21 an ounce, and it appeared that both markets were going to continue rallying the rest of the year.

We started to argue the fact that we expect energy prices at the end of the year to be low. Food prices are extremely low. One needs to simply look at the price of corn or protein markets, such as hogs or cattle, something we don’t trade but something we do follow. Also, the copper market is now pushing towards $2 a pound. That would be industrial inflation, or lack thereof.

With prices of practically every commodity heading lower as we go into the 3rd and 4th quarter this year, it’s hard to anticipate the gold market, which often is a measure inflation doing much to the upside. We think that this recent pullback in the precious metals are probably now a fair value. We don’t see commodity prices falling too much further from the level that they’re at, and, as far as gold and silver, likely will be supported by the idea that we have negative interest rates around the world. Many people are weary of the stock market. That will bring a certain amount of investors going into both gold and silver on dips.

Something that we’ve seen recently happen, silver has fallen $2.50 dollars an ounce recently and gold has fallen approximately $30-40 from its recent high. Later in September, of course, we’re going to be all waiting for the Federal Reserve to explain why they are raising interest rates or probably not. When they don’t raise interest rates, and that would be my guess, we’re going to probably see a possibly weaker U.S. Dollar and possible more buying into precious metals. That announcement from the Federal Reserve will determine whether gold is $50 under priced or $50 over priced. We don’t see the gold market busting out of this channel that we’re in right now.

We think gold and silver are fairly priced. We love the idea of being long gold at $1,000 an ounce and also being short gold at $2,000 an ounce. That is basically the strangle in the position we have as one of our core positions in our accounts. We like strangling in silver, as well. Of course, going into September, that is the end of harvest for coffee season in Brazil, the largest coffee producer in the world. Coffee bags will be produced by approximately 56-57 million bags in Brazil this year, the largest crop ever.

At the same time, in New York, warehouse stocks are at 13-year highs, so we don’t see coffee going much higher than where it is right now. It’s trading in the middle 140’s per pound. Can it get into the 150’s? Possibly, it can. We are looking at selling coffee calls double the price going into September and October. We think that is definitely low-hanging fruit and we think that is going to serve our clients quite well.

Anyone wanting more information from can visit our website. If you’re not already a client, feel free to contact our office and speak to Rosemary about becoming one, if you wish. As always, it’s great chatting with you, and looking forward to doing so again in 2 weeks. Thank you.

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