From today's Gartman Letter...... (11-19)

"Turning then to gold, firstly we note that as the dollar strengthens gold is of course weakening… but not all that much! Indeed, in foreign currency terms over the course of the past twenty four hours, gold is quite strong, vindicating our position of being long of gold predicated primarily in terms of other currencies other than the US dollar.

Regarding our “talk” yesterday of a rather uncommonly large gold options position at the $1200 level, our friends at TheBulliondesk.com wrote the following piece that we thought particularly worthy of note (and we wish to thank our old friend, John Brimelow, for bringing this to our attention, for we missed it when scanning thebulliondesk.com yesterday!)

Data from the Comex division of the New York Mercantile Exchange (Nymex) show hefty positions for December expiry at $1,200. Due to next week's Thanksgiving holiday, the right to exercise these options will expire earlier than usual on November 23. There are 2,392,400 ounces or 74.4 metric tonnes for the December $1,200 strike. This is equivalent to the amount of gold dealers would need access should the options be exercised.

Option traders use a system called delta hedging to manage the risk in their portfolios. The effect of this is to force anyone short of high strike - or out-of-the-money - call options to buy gold futures progressively to cover their position as the price rises, thus potentially helping to drive the market up….. A third trader…said that he has not yet started to cover. "For the December Comex $1,200 it is only five-percent delta at the moment. So if you were short 100 lots, you should theoretically be long five futures against them," he said.

We find his attitude rather cavalier… or perhaps uncommonly hopeful, or disguisedly disconcerted. Were we he, we’d be a great deal more disconcerted that his comment seem to indicate that he is. Should gold not falter today as the dollar weakens, we’d imagine that this disconcertion shall rise apace, and if it does not, it should!"