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Manipulative Gold ‘Fat Finger’ Or Algo Trade Worth 1.24 Billion USD
Gold’s London AM fix this morning was USD 1,661.25, EUR 1,253.02, and GBP
1,024.70 per ounce. Yesterday's AM fix was USD 1,662.50, EUR 1,256.61 and GBP
1,021.44 per ounce.
Silver is trading at $30.85/oz, €23.37/oz and £19.10/oz. Platinum is trading
at $1,570.00/oz, palladium at $677.60/oz and rhodium at $1,350/oz.
Gold rose $3.80 or 0.23% in New York yesterday and closed at $1,666.10/oz.
However, there were more peculiar goings on in the gold market which saw one
massive sell order knock prices lower, prior to gold gathering itself and moving
higher.
Cross Currency Table –
(Bloomberg)
Bullion traded sideways in Asia before slight weakness and has dipped
marginally in early European trading.
Gold may complete its 6th day of price increases, its best run since August,
as business activity in the US expanded at its slowest pace since November 2009,
creating demand for gold as a heading instrument and a safe haven.
Gold’s technicals are mixed after April’s slight loss (-0.2%) meant that gold
has now had 3 consecutive monthly losses - the first since 2000.
However, gold has a bullish outside reversal week last week and the higher
quarterly close of a 6.7% gain in Q1 2012, and 11 consecutive years of annual
gains mean that the long term technicals remain favourable.
Bullion is now 6.5% higher this year and heading for its 12th straight annual
advance as demand continues as a hedge against inflation and central banks
continue to debase fiat currencies.
Fed Chairman Ben Bernanke said April 25 that he’s prepared to “do more” if
needed to spur the economy.
Investors are watching weekend elections in France & Greece and a
European Central Bank meeting on Thursday, after data showed that Spain sank
into recession in the first quarter.
Palladium hit its highest price in 6 weeks and is trading near
$686.75/oz.
Manipulative Gold ‘Fat Finger’ Or Algo Trade Worth $1.24
Billion
The gold market was briefly shaken by an unusually large
early morning sell order, which triggered a brief trading halt in gold futures
and left traders questioning whether the transaction was a mistake and the
motivation of the seller.
Gold 3 Day Chart –
(Bloomberg)
Gold fell $14 in one minute despite no breaking financial and economic news
and despite no movement in the dollar, oil, equity or bond markets.
There was only the insignificant personal income and spending numbers – which
came in slightly better than expected and could not justify such quick
falls.
CME Group Inc's Comex division recorded an unusually large transaction of
7,500 gold futures during just one minute of trading. The sale took out blocks
of bids as large as 84 contracts in one fell swoop and cut prices down $15 to
$1,648.80 a troy ounce.
The sharp losses triggered a 10-second trading halt in June-delivery gold
futures, CME told Dow Jones Newswires Tatyana Shumsky.
"The market was given a short period to recalibrate and ... it was for 10
seconds," a CME spokesman said. "It only happened in gold futures, in the June
gold contract."
Gold traders buzzed with speculation that the transaction was an input error
- a so-called "fat finger" trade. "Or a Gold Finger as it might be known in the
bullion market," traders at Citi joked in a note to clients.
The massive size of the transaction - 750,000 troy ounces worth more than
$1.24 billion – led to speculation that it was either a mistake by a trader or
that an entity wished to manipulate the market lower.
Such large trades have frequently been seen at month and quarter beginning
and ends. Yesterday was the last trading day of the month. They have also been
seen when Ben Bernanke has been making important statements regarding the dollar
and the outlook for the US economy.
The nature of the massive sell order, one of many seen in recent months,
suggested that the seller was not motivated by profit and may have had other
motives. Such large trades are rarely conducted amid very thin trading
volumes.
Trading yesterday was expected to be quiet as market participants in China
and Japan were out on holiday and many European traders were preparing for May
Day holidays today.
"No one who has the account size and the money to trade thousands of gold
contracts would do it in one transaction; that's just stupid," said one
trader.
Silver 3 Day Chart –
(Bloomberg)
It seems likely that the seller was either a large hedge fund or institution
as the collateral required to purchase 7,500 contracts is high. The seller would
have had to have deposited $ 75.9 million in cash with a broker.
There was a suggestion in the Reuters Global Gold Forum that the selling may
have been due to algorithm trading or computer driven.
The trade could be as a result of the shift to electronic trading. Computer
trading systems are vulnerable to input errors, as they do not ‘question’ the
order before executing the transaction.
By contrast, when most order flow would pass through the Comex floor where
human traders processed the deals, potential errors stand higher chances of
being intercepted and there is a higher level of transparency.
"You would definitely [verify a trade this big] before you executed it," said
one Comex floor broker.
However, the trade is unlikely to have been a keystroke error as silver also
saw substantial selling at the same time and similar price falls.
This suggests that the seller wished to see gold and silver prices lower.
Some traders suggest that there may be High Frequency Trading (HFT) programmes
that can see where stop loss orders are placed and sell in order to force stop
loss selling – then buying back and thus making a quick profit.
It will further fuel allegations that certain Wall Street banks, either alone
or in conjunction with the Federal Reserve and US Treasury, are intervening in
and manipulating prices in the precious metal markets.
The Gold Anti Trust Action Committee (GATA) and other knowledgeable market
participants have alleged that this is continuing to be done in order to
maintain faith in the US dollar and the US capital markets.
»
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You know the CME halted trading when that "fat finger" happened and fkd whoever did that straight in the ass. That is the only reason you heard the crying at the WSJ on the matter. Can't get a trade cancelled if you did it on purpose to manipulate the market.
So who is coming to town? Maybe the new owners of the United States. Maybe they are discussing how to put 5 million people from a small mediterranean country into foreclosed American homes owned by the FED before they go to war. Just a thought.
and ever higher it goes.
as the paper returns to its base value.
Does this BLATANT move equal DESPERATION? Methinks so...
Thor's hammer in the paper realm.
Not a chance. Any individual or group of individuals who purchase large positions of gold and/or silver will end up having accidents and their orders liquidated, most of these institutional bankers know this, you trade with the devil, you follow his rules!!! These folks know this! Just saying!
Surely these casino games and MF Global embezzlments are going to eventually wake these institutional paper traders up to the opportunity of buying physical metal and breaking the house.
www.pmbug.com
+ 1
The Bearing likes the Bug's site!
When the paper game goes down in flames, the gold mothership will leave all else behind. We miss you Gordon_Gekko!
Right, I've got your fat finger hanging.
You mean dangling.
Monday's slam down in gold/silver and recovery was very unique.
It bounced back with blinding speed and the MSM mentioned it as manipulation.
The very fact that the MSM mentioned it at all is out of the ordinary.
This was not the usual cartel but someone with a lot of paper fiat wanting to convert to gold.
The junkyard dogs came out on this one because the junkyard owners didn’t get tribute!
And trading was halted mid-slamdown. Also unusual. And costly for the "fat finger" who did not get the end result he spent so much fiat trying to achieve.
It now serves the narrative to suggest that gold prices are manipulated. The point is to scare people away from buying it.
We've got a few recent downward revisions on price targets on top of blatant downdrafts.
All designed to get people thinking that gold is too speculative and risky.
"All designed to get people thinking that gold is too speculative and risky."
Only if you day trade.
For my tax exempt retirement account I save fiat dollars and when I have enough I buy an oz
So bring the price down baby. When this shit ends the price will be fair market, hopefully when I retire.
I disagree with your comment "Only if you day trade."
For people who have NEVER bought gold, especially physical, the first purchase is often emotional. How can one coin cost so much? Even buying 1/4 oz. at around $500 with premium is more than most people feel comfortable paying. If there is a perceived risk that the price is going down then it is very easy to rationalize NOT buying.
If you already own physical gold then my guess is that nothing the market does will change your outlook about holding. ZH'ers might see "buying" gold as converting FRNs, but first timers don't necessarily see it that way. My initial comment stands.
Hey its fight club you are entitled to your own opinion.
I did say “When this shit ends the price will be fair market”
So even if someone bought a 1/10th oz for $200 and held it that person would retain the value of his labor. Flipping a trade in any commodity today is not without risk but storing rice, bullets, booze or whatever with the inflation we’re experiencing is a sure thing.