Man vs. Machine (and GS)

So, Tungstenman Sachs comes out this morning with a sell-side memo saying Brent should go to $105. All hell breaks loose.

Why would GS do such a thing? My guess is…with May crude options expiry coming up on Thursday, GS needed to break free of a significant short position in calls. I guess we now know why crude was down so heavy yesterday, too. GS undoubtedly gave some of their “best clients” a little advance notice of their intentions. In the end, all this does is create a buying opportunity. Ask yourself, are peace and stability suddenly breaking out all over The Middle East and North Africa? No…not so much.

To that end and to raise cash, I sold some May $40 silver calls and bought some June $110 crude calls about 15 minutes ago. I missed the dip to my 1445 price in gold, however. I am hoping with crossed fingers that I’ll get another shot. I’m in with a limit order, trying to buy some June 1450s.

Anyway, here’s your WTI chart:

And then the machines kick in and crush gold along with it. Yes, this makes sense only if you’re a mindless algo hedgie:

Silver refuses to buckle which is very encouraging. As I type, its back UP to 40.27. Gold is now $10 off its lows too which means I’m probably not going not get filled on my 1450s. Nuts. The HUI got under 580 which means its correction has now run its course.

Keep the faith. Buy the next dip. TF

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