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    Here’s a question that might have you pondering: Is gold a commodity? More importantly, are we doing a disservice to the gold industry by calling gold a commodity? These may sound like silly...

"Stop Logic" Gold Slam Was So Furious It Shut Down CME Trading Again

Tyler Durden's picture




 

It was precisely a month ago when, in "Vicious Gold Slamdown Breaks Gold Market For 20 Seconds" we wrote:

There was a time when, if selling a sizable amount of a security, one tried to get the best execution price and not alert the buyers comprising the bid stack that there is (substantial) volume for sale. Of course, there was and always has been a time when one tried to manipulate prices by slamming the bid until it was fully taken out, usually just before close of trading, an illegal practice known as "banging the close." It appears that when it comes to gold, the former is long gone history, and the latter is perfectly legal. As the two charts below from Nanex demonstrate, overnight just before 3 am Eastern, a block of just 2000 GC gold futures contracts slammed the price of gold, on no news as usual, sending it lower by $10/oz. However, that is not new: such slamdowns happen every day in the gold market, and the CFTC constantly turns a blind eye. What was different about last night's slam however, is that this time whoever was doing the forced, manipulation selling, just happened to also break the market. Indeed: following the hit, the entire gold market was NASDARKed for 20 seconds after a circuit breaker halted trading!

Moments ago it just happened again. As part of the already noted massive gold slamdown just before 9 am Eastern, when "someone" sold an epic 2 million ounces of gold in one trade, the CME just went dark for 10 seconds, blaming it on an appropriately named "stop logic" event.

What is Stop Logic? Basically, it is a the mother of all stop hunts, which takes out the entire bid stack and continues until such time as there is absolutely no liquidity left in the entire market! From the CME:

Stop Logic detects potential market movements caused by the triggering and trading of Stop orders where the resulting price move would extend beyond an exchange specified threshold.

 

The triggering of Stop orders can potentially exaggerate price movements in temporarily illiquid markets. When triggered Stop orders attempt to move the market to an executing price beyond a pre-established value, a Stop Logic event occurs. Stop Logic detects these situations and responds by placing the identified market in a Reserved state for a predetermined period of time, usually 5 to 10 seconds, depending on the instrument. During the Reserve period, new orders are accepted and an Indicative Opening Price (IOP) is published, but trades do not occur until the Reserve period expires, thereby providing an opportunity for participants to respond to the demand for liquidity. At the end of the Reserve period, the instrument will re-open and matching will resume.

 

When a futures contract designated as a lead month contract experiences a STOP Logic event, associated options markets are paused and Mass Quotes canceled.

 

Stop Logic will not prevent markets from ultimately moving in the direction of the order flow, but allows time for liquidity to enter the market so that new orders can be matched against the triggered stop order(s).

Of course, the liquidity we re-enter at a time when the prevailing price has been reset substantially lower on what is basically a "banging the open" type of event, or in this case market open, when one or more traders attempt to generate the well-known "momentum ignition" event so known to HFT algo manipulators everywhere.

The chart below from Nanex show precisely when and how the trading was stopped for 10 seconds in the aftermath of the furious sell trade.

So what is an investor who believes this was manipulative trading to do? Well, nothing. Recall that the ever helpful Bart Chilton already made it clear that commodity (read precious metal) traders are on their own because, as a result of the furlough, the regulator simply incapable of doing anything.

From: Chilton, Bart <BChilton@cftc.gov>
Date: Tue, Oct 1, 2013 at 9:32 AM
Subject: Re: Today's Smackdown
To: XXX@XXX

 

No regulators looking at markets due to government shut down.

 

B

 

NOTE: Ponzimonium: How Scam Artists are Ripping Off America, is now available in a FREE EBOOK edition. Go to the link for your copy and a Government Book Talk interview: http://govbooktalk.gpo.gov/2013/09/03/post-ponzimonium-an-interview-from-the-front-lines/

* * * 

 

From: XXX@XXX
Sent: Tuesday, October 01, 2013 09:16 AM Eastern Standard Time
To: Chilton, Bart
Subject: Today's Smackdown
 
Commissioner Chilton,

 

Any comment on this morning's shenanagins in the gold and silver pits?  Time to reopen an investigation?
Is credibility important to the CFTC?

 

Regards,

 

XXX

Expect market halting gold trading dumps to continue indefinitely, and certainly for the duration of the CFTC's "shutdown", which of course is helpful to those, like China, who continue to convert increasingly more diluted fiat into hard stores of value.

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Fri, 10/11/2013 - 09:54 | 4044782 Cognitive Dissonance
Cognitive Dissonance's picture

I always sell my precious assets all at once when there are few buyers around. Preserving capital is so over rated.

Fri, 10/11/2013 - 09:56 | 4044799 SWRichmond
SWRichmond's picture

If you don't hold it you don't own it.

Sinclair warned about "trading" long long ago.

Fri, 10/11/2013 - 09:58 | 4044821 achmachat
achmachat's picture

I send a heartfelt warm fuck-you to Gary Gensler and Bart Chilton!
there is no definitive proof of manipulation my ass! 

Fri, 10/11/2013 - 09:59 | 4044829 Arius
Arius's picture

i do not get the point really ... it only subsidies the buyers at low prices at the expense of Joe Sixpac ....

 

otherwise all that nonse of gold being a barometer , canary etc. is just nonsense;

anybody who is anybody doenst need a thermometer to see the patient is dying, all you got to do is to look at how much printing is going on and you dont need gold or bonds to tell you that

Fri, 10/11/2013 - 10:00 | 4044836 Max Hunter
Max Hunter's picture

I smell smoke.. still..

Fri, 10/11/2013 - 10:02 | 4044855 nope-1004
nope-1004's picture

Currency war, plain and simple.  ANY USD alternative will be slammed until a change in trade settlement, Petro dollar reserve, or bankruptcy occurs.  Seems rather logical.

 

Fri, 10/11/2013 - 10:05 | 4044870 Sweet Chicken
Fri, 10/11/2013 - 10:18 | 4044935 BaBaBouy
BaBaBouy's picture

PHYSICAL BITCHES !!!

Fri, 10/11/2013 - 10:21 | 4044968 eclectic syncretist
eclectic syncretist's picture

Why can't the NSA find and stop these terrorists?

Fri, 10/11/2013 - 10:24 | 4044979 SilverIsKing
SilverIsKing's picture

First 'stop logic' event was in 1913 and the second was in 1971.

Fri, 10/11/2013 - 10:30 | 4045016 BaBaBouy
BaBaBouy's picture

"" Why can't the NSA find and stop these terrorists? ""

 ... A Job For BATMAN ...

Fri, 10/11/2013 - 10:42 | 4045042 eclectic syncretist
eclectic syncretist's picture

Anyway, it took a sale of 70 tonnes to bring the price down what, 1-2%?  Soon they'll need to sell 1,000 tonnes worth of paper gold at a time to keep this charade up

Fri, 10/11/2013 - 10:44 | 4045047 synergize
synergize's picture

Exactly!  Gold prices dropping yet COMEX inventories (http://seekingalpha.com/article/1730402-weekly-comex-gold-inventories-go...) not growing andminers cutting back - someone desperate to get others to sell gold...?

 

--------------------

If you are fed up with whats happening with the government - it all stems from one major thing: the government's control of our money.  We have placed in our government the ability to control the money supply and dish out new money to whomever they please (usually their cronies and the banks) and to spend and create that money in infinite amounts to SUPPRESS we, the People.

To break this system we have to bring back real money and thus limit government control over money and our lives.  We can break the system by overwhelming the physical markets and give a no-vote to their control over money - they key is the small silver market.

Join the Silver Pledge - an effort to change the system by having investors join up and buy physical silver - together we can break this market and take back our government.

You can read more here:

http://www.communitysynergy.com/subscribe/silver_pledge_site.html

If you dont like it dont sign up - but for people who are sick of sitting and doing nothing at least lets work together to BREAK this silver market

Fri, 10/11/2013 - 10:54 | 4045069 mick_richfield
mick_richfield's picture

Hear, hear!

If they can force fiat money upon us, they have all power and your votes have no effect.

It's as inevitable as gravity and thermodynamics that people who can create fiat currency at will must control the society completely.  Next time you get pissed off about a politician, try to remember that you have been hypnotized.  Watch the people who create the money -- they are the only powers.

State-money is the root of our enslavement. 

Strike the root.

 

 

Fri, 10/11/2013 - 11:02 | 4045103 Stuart
Stuart's picture

Shareholders of gold companies need to revolt against their management and demand that they will no longer abide by the paper prices for delivery of their gold and set their own price.  It's a tough, tough business.  That would require management of gold companies to get their heads out of their asses, grow a pair, basically wake the fuck up and open their closed eyes to the abusive attacks being waged against them.    Basically stand up for their companies and shareholders and say FU to the exchanges that enable and/or are complicit in the paper price manipulation/attacks and they will no longer deliver to the COMEX or any bullion bank.  Anyone who wants real physical gold needs to buy directly from the gold company.   They need to price independent of the paper gold markets.   BUST the COMEX!   

Fri, 10/11/2013 - 11:42 | 4045262 Pinto Currency
Pinto Currency's picture

 

the lbma and comex gold and silver markets have become visible frauds for all to see so they are going to be ignored

 

right now we have distribution of gold to purchasers - and daily silly price action is being ignored

 

thr fake london and new york gold markets are going to be replaced by moscow, shanghai, singapore where actual gold trading will occur

 

Fri, 10/11/2013 - 14:14 | 4045963 Rubbish
Rubbish's picture

Why fight it? I want cheap PM's to buy moar.

 

I could care less the price for 3 1/2 yrs.

Fri, 10/11/2013 - 11:06 | 4045126 synergize
synergize's picture

@Mick - EXACTLY!  Gold/Silver aren't just investments they are a way to take back the system.  You give them control of your money and you give them control of everything.  I'm buying more to break this system!

Fri, 10/11/2013 - 11:34 | 4045226 FreeNewEnergy
FreeNewEnergy's picture

That "silver pledge" websie is probably a government front. One million people buying five ounces a month is nothing. I'd wager there is triple that volume bought and sold on ebay in the same time frame, maybe more, possibly much more. It's a huge, active physical market and premiums have been anywhere from 20-40% for months now, since the big whack-down in March or May, I think it was.

Singing up for anything these days that is in opposition to the federal government's main aim to destroy the US and global economy is just plain stupid. When the SHTF, they'll have your name, address, email info, etc. and will be coming for your multiples of five ounces.

Fuck this shit. I have enough silver for now and generally, it's not a good investment, so long as the ponzi and manipulation are allowed to continue. I think a serious crash is coming and all the silver in the world - which will be worth much less than it is today, BTW - isn't going to help anybody. Food. Food. Food. 

Mon, 10/14/2013 - 14:55 | 4053380 MeelionDollerBogus
MeelionDollerBogus's picture

yup. I can use some silver for medicine, some for electronics but if I'm overburndened by weight I won't be able to run with it & sell it all inneed. With food there's barter & consumption in a more available manner than silver, though for weight I'd have to balance it vs silver for later trade purposes - a difficult guesstimate but necessary to try.

That's why primarily for stored purchasing power in metals I'm with gold. I don't care that silver is fiat exponential relative to gold: what I care about is I can run with a lot of it in purchasing power not nearly as burdened as a box of silver maples.

Fri, 10/11/2013 - 11:44 | 4045254 Gazooks
Gazooks's picture

not exactly. 

 

one shouldn't think so much 'invest' in metals as the exchange of a politically contrived instrument of debt-enslavement for a liberating universal instrument of actual physical value

holding metals should be considered an act of defiance to systemic corruption by pervasive political evil

we don't need to 'take back' what isn't ours, rather reestablish what actually is ours

 

honest exchange by purity and weight of value for value

Fri, 10/11/2013 - 11:22 | 4045200 blindman
blindman's picture

we do not have "state" money. we have private federal reserve
notes and "state" treasury bonds as base money in a fractional
reserve system which is privately operated and state
sponsored, the worst of both worlds! the devil is in all
the devilish details and condemning the "state" as the culprit
releases and relieves the guilty private parties from their
actual responsibility. granted, even the individuals are
abstractions and mere legal "persons".
and the forms of enslavement are many and removing one
so identified does not guarantee or even suggest liberation
if you have not correctly identified the problem at the
source.
just saying there is more to it than mere condemnation
in such a sweeping manner if you actually think about it.
watch for the straw man incrimination while the guilty
disappear with all the money! it is control fraud and
become institutional at nearly all levels public and private.

Fri, 10/11/2013 - 11:37 | 4045240 mick_richfield
mick_richfield's picture

Ah, that's a good point.

I usually think of the Fed -- and their masters -- as the State, since they are the only real power in the Subjugated West.

I think of the State as a two-stage thing: the real powers, and the puppet-show for kiddies.  Instead of bread and circuses to keep the masses docile, EBT cards and political campaigns.

I guess step 1 of the liberation is to make as many people as possible see that the political game is a deliberately constructed false polarity:  90% of all people get drawn to one side or the other -- but that's the wrong polarity.  Then the Matrix has you.

They have us pointing at each other, when we should be turning our gaze upon our real enemies.

 

Fri, 10/11/2013 - 12:50 | 4045620 blindman
blindman's picture

right!
the problem has become extremely complex
yet visible to the naked eye.
(here ignore the heart stopping, mind boggling
horrible and beautiful
idea of digital money)
money must resonate with at least the two
parties involved in transaction. two
entirely? different individuals must share
something concerning the perception of the
value of the instrument in the transaction.
so what is perception? gold? value? language?
time? the state? it is a complex, complex.
.
today,
the state appears as the enforcer of the fraud perpetrated
by the private slave master is the way i think
about it. has been hijacked by the money interest
and financialised in desperation all aspects of life.
the results are dystopic for the vast majority of
living things , not that there are no qualities
derived but one might ask what is the price,
what has been lost or ruined?
the state is supported and created to
protect the rights (in some cases and states) of the individuals
from tyrannic trampling, it is not constructed to
become an instrument of enforcement for greater
tyrants! when it becomes compromised the founding
documents call for revolution, amendment, dissolution
or succession. then a particular state is done with
and invariably a new emerges from the ashes but, what
was it that destroyed the old state of things?
.
the people which, in a republic, are the state!
the state is plural in that it only exists in the
mind/s of a collection of individuals. shared mentality,
language/s, laws, sentiments ..etc. and money, legal tender.
.
if there is to be fiat and fractional reserve money i
think it must be state money or treasury notes and
could exist side by side with private hard asset money
or p.m.. but, private markets would/have leveraged
that to create credit money too/ the derivative market
was a private domain creation on the back of the state
sponsored bond market. now, no one knows what anything is
worth in any market. we know the cost of everything but
the value of nothing (someone said it).
.
so, there are babies and bathwater and we seek
a standard to tell us which is which.
someone said that the standard is, for better or worse,
always gold due to physics, parochial principles and the
marriage of the two. oh, the marriage is gold
itself.
anyway poems *t

Fri, 10/11/2013 - 13:23 | 4045758 blindman
blindman's picture

#
beyond that you can't see it, hold it,
touch it or eat it, never mind i don'
think you can even smoke it;
the problem with digital money is that it
demands surrender of the human mind,
the individual,
to the machine,
virtually and literally.
the hardware and software offering thru the mind
of god to the highest bidder and then it is gone.
.
a can of philosophical worms
and infinite opportunities,
the power over world altering
creation, recreation and representation
from god to the highest bidder
and then gone.

debt slavery and beyond the
chicken coop/soup, into the fire!

Fri, 10/11/2013 - 19:05 | 4046709 Againstthelie
Againstthelie's picture

Correct, the financial regime is ruling, not politics.

Good to read a sane voice among all this libertarian BS against the "evil" state behind all this, although the money masters have taken over the state a long time ago. It's a Plutocracy.

Only a strong state can establish the primacy of politics and therefore remove the money masters from power, not a even weaker state with even weaker politicians. How weak should politicians become? Isn't it enough, that they are weaker than the mass media conglomerates? Isn't it enough, that mass media determine what is allowed as free speech? Libertarians want an even weaker state! What sane person can see it as progress, if the money powers and their mass media would have even less to fear?!

Fri, 10/11/2013 - 14:13 | 4045959 TheRedScourge
TheRedScourge's picture

If you take away the state, you take away the big escalator with the sign in front of it which says "Free Evil!" which sociopaths use to get to the top. If you want to kill a tree, you must strike the root not the branches. We can't stop sociopathy without revolutionizing parenting, but we can stop incentivizing it and cut down institutions which incubate it and seed hatred, depression, and anger, like the public schools and the welfare state. Within a few generations if we starve it out, the parasite dies.

Fri, 10/11/2013 - 18:38 | 4046687 Againstthelie
Againstthelie's picture

We do not have state money, this is private bank money!

Private banks create the money by people making loans.

And state money is also not slavery, but INTEREST SLAVERY is slavery.

There can be interest free state money, too.

And without a state you couldn't even go out of the street. An open window in a summernight? Forget it. A judicial system? Not there! Police! Not there!

And last but not least: this is a regime of the money masters, it's a PLUTOCRACY.

The only way to stop this, is a STRONG state and politicians that fight the plutocrats instead of political actors playing roles.

 

Fri, 10/11/2013 - 12:21 | 4045470 TheReplacement
TheReplacement's picture

To break the system we have other options than just buying silver.  We can stop paying taxes.  We can stop buying things from corps.  We can stop using big banks.  We could just march on and burn DC and NYC and hang all of the criminals, after a fair trial of course.

Go ahead, keep buying silver. 

Fri, 10/11/2013 - 11:51 | 4045300 fomcy
fomcy's picture

NO, dude your calculation is wrong 1000000 oz * 0.311 (troy oz in kilo) = 311000 Kilo= 311 T

So 2 Mil OZ = 622T roughly 10x your guess :) So Yearly Gold supply is 2690, Somebody

Just dump 1/4 of total yearly GOLD supply and Price went down $20 :))) Keep dumping, Crooks.

Fri, 10/11/2013 - 12:51 | 4045627 mick_richfield
mick_richfield's picture

It's 32.1 toz per kilogram, so 2000000 / 32.1 ~= 62,000 kg == 62 mt.

Fri, 10/11/2013 - 10:47 | 4045050 scatterbrains
scatterbrains's picture

Why  don't they slam oil at 3:00 am in thin volume.... maybe give us niggas in the streets a break on our gas bill? 

 

Fri, 10/11/2013 - 13:31 | 4045794 quasimodo
quasimodo's picture

Yeah, so those dumbfucks can drive the gas gulping SUV's even more. Actually not a bad idea, might bring this bitch down a little sooner?

At least we know things get cheaper as gas goes down right?

 

Well?

Fri, 10/11/2013 - 14:18 | 4045965 TheRedScourge
TheRedScourge's picture

Burning fossil fuels is better than burning trees at least. If we lived like that, the earth could only support about 1/10th the current population.

Fri, 10/11/2013 - 10:41 | 4045045 HardAssets
HardAssets's picture

Dont forget Nov 22, 1963.

Fri, 10/11/2013 - 10:27 | 4044972 BaBaBouy
BaBaBouy's picture

.

Fri, 10/11/2013 - 10:14 | 4044928 Arius
Arius's picture

may be you are correct, it stares you on plain view ....

actually i have been watching the change in price and it corresponds to certain level of the euro exchange to the dollar ... i always thought was not about gold but about the exchange dollar and euro and perhaps other currencies.

that would explain, the hedge funds on foregin exchange being carried out in stretchers ...

Fri, 10/11/2013 - 10:27 | 4044991 SilverIsKing
SilverIsKing's picture

EURUSD went from about 1.3565 to 1.3560 when gold was slammed down at 8:40am this morning.

Is that what you are basing your assertion on?

Fri, 10/11/2013 - 10:48 | 4045059 Arius
Arius's picture

no, on observation over months.  fex. the line for gold seemed to have been around $1330 and 1000 Euros.  even if gold went higher in dollars (1360, 1370) the exchange rate would change so always gold was under 1000 in Euros.  The 1000 euros seemed to have been a more important level

Fri, 10/11/2013 - 11:49 | 4045283 FreeNewEnergy
FreeNewEnergy's picture

My most basic indicators are the price of corn, corn in relation to silver, and the combined new highs-new lows on the NYSE and NASDAQ. Lately, despite yesterday's completely contrived equity rally, they'll all been bearish, and deflationary.

This is the Fed's conundrum and why they must continue to print and not taper. They cannot stop deflation. Tried for five years and can't do it. Forget about the price of gas and food. Look at housing, basic, low-end housing. Still down in many areas of the country. Sure, it's up according to the "official" statistics, but it is going to go lower, because stuffing the 1% with all the money doesn't stop deflation for the 99%.

Since price discovery is all but destroyed in just about every commodity and sector, you have to improvise. I've seen significant sales on canned goods, poultry and, of all things, coffee, recently. Food continues to be super cheap, also somewhat dependent on what you buy and where you live, but the deflationary spiral cannot be stopped and it all ties together with the government shutdown and debt ceiling fiasco. They're fucked and they know it. They just don't know how to get out of it. After five years of trying in vain, that, at least, should be obvious.

Corn, for what it's worth, was what Adam Smith used as a basic guideline for everything, real price, nominal price, money price, discounted presnt value, etc..

Fri, 10/11/2013 - 13:01 | 4045660 akak
akak's picture

Clearly you do not pay any utility bills or do your own grocery shopping, or you would realize that your so-called "deflationary spiral" is just a figment of your fevered imagination.

No fiat currency system in history has ever died in deflation --- they ALL died via currency collapse and/or hyperinflation.  The notion that the printable-at-will fiat currency of a bankrupt nation will suddenly begin to radically APPRECIATE in value is both historically ignorant and utterly laughable.

Fri, 10/11/2013 - 14:26 | 4045984 TheRedScourge
TheRedScourge's picture

That might be true if not for the fact that these fiat currencies are debt based now. Every time someone takes a loan, 90% of that is used as assets for a bank to make another loan to someone else, and so on and so forth. If all the debts start to default, or people start paying them off, the monetary base suddenly shrinks. They're trying to expand the monetary base incase that sort of thing happens, probably because they expect it to, or perhaps because they think they can turn the sentiment by driving the markets up with these new dollars. Unfortunately, every further dollar they create is having less and less of the sort of manipulatory effect they desire. If they print too rapidly they destroy the currency; if they print too slowly the credit markets seize up and it all turns to shit. They're trapped between a rock and a hard place.

Fri, 10/11/2013 - 15:29 | 4046180 akak
akak's picture

When have fiat currencies ever NOT been debt-based, whether explicitly or implicitly?  And PLEASE don't give me any of that Bill Still swill about the supposed beauty of Lincoln's greenbacks --- ALL fiat currency fundamentally represents an inherent theft from the population at large.

Fri, 10/11/2013 - 10:15 | 4044943 PP
PP's picture

if you can't stop those manipulators in the "market", you can stop them in real world, e.g. shot them dead, burn their building, rally, revolution, etc...

Fri, 10/11/2013 - 10:45 | 4045052 Max Hunter
Max Hunter's picture

If an entity held 1 or 2 trillion of US debt, and the sUS is printed and extra 1 or 2 trillion a year, and getting no growth, at what point do said entity take losses?

Fri, 10/11/2013 - 10:06 | 4044861 Manthong
Manthong's picture

Bart has been impotent (in more ways than one) from the get-go.

..stand and deliver (in more ways than one).

Fri, 10/11/2013 - 10:26 | 4044995 SilverIsKing
SilverIsKing's picture

Bart should write a book.

It would go something like this:

Fri, 10/11/2013 - 10:17 | 4044947 astoriajoe
astoriajoe's picture

smoked muppets I suspect.

Fri, 10/11/2013 - 10:15 | 4044946 sumo
sumo's picture

" do not get the point really ... it only subsidies the buyers at low prices at the expense of Joe Sixpac"

 

That is the whole point, precisely. The deal is that China keeps holding T-bills, but in return the Fed makes gold cheap for PBoC and SAFE to buy, in preparation for the next monetary system which involves gold to some extent.

The Fed "wins" by making Gold look less desirable than the dollar, and keeping the petrodollar game going, until all the Central Bankers agree on the next system. SDRs, maybe?

Remember when Warren "Wells Notice" Buffett was moving to corner the Silver market, and how quickly TPTB put a stop to that? There is no way that the present-day drain of gold, flowing to Asia, runs counter the the Fed's plan. All this is orchestrated and approved by the Fed, to bribe China.

Fri, 10/11/2013 - 10:18 | 4044948 sumo
sumo's picture

dup

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