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What Do They Know? CME Implements Gold, Precious Metals Circuit Breakers Up To $400 Wide
With memorandum S-7258, titled "Implementation of New NYMEX/COMEX Rule Regarding Special Price Fluctuation Limits for Certain NYMEX and COMEX Metals Futures and Options Contracts" released moments ago by the CME Group, and set to become effective on December 21, 2014, and which seeks a 5 minute trading halt when "price movements in lead-month primary futures contracts result in triggering events"... "as a measure that is consistent with promoting price discovery and cash-futures price convergence" in order to "deter sharp price movements that may, for example, be driven by illiquid central limit order books prevailing from time to time in otherwise liquid markets", one wonders why now, and what does the CME know about upcoming volatility, or lack of liquidity, in the precious metals space that nobody else does (and does any of this have to do with the "berserk" algo test from November 25?)?
To wit, from the CME, highlights ours:
Implementation of New NYMEX/COMEX Rule Regarding Special Price Fluctuation Limits for Certain NYMEX and COMEX Metals Futures and Options Contracts
Background
Effective Sunday, December 21, 2014 for trade date Monday, December 22, 2014, and pending all relevant Commodity Futures Trading Commission regulatory review periods, the New York Mercantile Exchange, Inc. (NYMEX) and Commodity Exchange, Inc. (COMEX) (collectively, the Exchanges) will implement new NYMEX/COMEX Rule 589 (Special Price Fluctuation Limits) to apply price fluctuation limits to certain metals futures and options contracts. Price fluctuation limits deter sharp price movements that may, for example, be driven by illiquid central limit order books prevailing from time to time in otherwise liquid markets.
NYMEX currently applies price fluctuation limits to its energy complex of futures and options contracts. These limits are referenced in each contract’s respective NYMEX product rulebook chapter. The Exchanges are proposing new Rule 589 to extend price fluctuation limit functionalities to certain metals futures and options as a measure that is consistent with promoting price discovery and cash-futures price convergence. The operation of new Rule 589 for metals futures and options contracts is described below. The full text of the new rule is set forth in Appendix B. Appendix C provides the specific limit levels for the relevant NYMEX/COMEX contracts to which Rule 589 will apply.
The Operation of New Rule 589 for Metals Futures and Options
At the commencement of each trading day, new Rule 589 will require the Exchanges to determine initial price fluctuation limits as levels above or below the previous day's settlement price for lead-month primary futures contracts. There are three primary COMEX metals futures contracts and two primary NYMEX metals futures contracts. These contracts have the largest and most liquid metals central limit order books on CME Globex or are considered separate and distinct stand-alone products on an outright basis. The lead-month contract, as determined by the Exchanges, will typically be a primary contract’s most actively traded futures contract month.
The Exchanges will monitor the price movements of lead-month primary futures contracts in real-time on a daily basis. Price movements in lead-month primary futures contracts will result in triggering events. Triggering events result in monitoring periods, possible temporary trading halts followed by the re-opening of trading, and price fluctuation limit expansions.
If the lead-month primary futures contract is bid or offered via CME Globex at the upper or lower first special price fluctuation limit, the Exchanges will consider such an occurrence a triggering event that will begin a five-minute monitoring period in the lead-month contract. If at the end of this five-minute period the lead-month primary futures contract is not bid or offered at the applicable limit, the Exchanges will expand the limits an additional price limit increment above and below the lead-month contract’s previous-day settlement price. If, however, at the end of the five-minute interval, the Exchanges determine that the lead-month primary futures contract is bid or offered at the applicable limit, they will commence a two-minute temporary trading halt in all contract months of the primary futures contract as well as in all contract months of associated products. Primary contracts and associated products are identified in Appendixes A and C.
Following the end of a temporary trading halt, the Exchanges will re-open trading in all contract months of the primary futures contract as well as in all contract months of associated products. When trading resumes, the Exchanges will expand the price fluctuation limit an additional increment above and below the lead-month contract’s previous-day settlement price. Subsequent price fluctuations, if significant enough, will trigger the same sequence of monitoring periods, possible trading halts followed by the re-opening of trading, and incremental adjustments to price fluctuation limits.
As noted above, when an initial triggering event occurs, the Exchanges will commence a five-minute monitoring period. In each instance, the Exchanges will subsequently expand the price fluctuation limit for all primary futures contract months, as well as all associated products, by an additional increment above and below the lead-month contract’s previous-day settlement price. The incremental adjustment will occur regardless of whether or not a trading halt is triggered. However, no further special price fluctuation limits will be implemented following a trading day’s fourth price fluctuation limit adjustment.
Expiring Contracts
There shall be no special price fluctuation limits for an expiring primary metals futures contract during the period between and including the contract’s first intent day and the last delivery day. The Exchanges will also not call temporary trading halts or an expansion of special price fluctuation limits for primary futures contract months or their associated products during the last five minutes of trading between and including the first intent day and the last delivery day of a related expiring primary metals futures contract.
Floor Trading
The Exchanges will apply special price fluctuation limits to all primary metals futures and options contracts and all associated metals products that are available for trading on the floor. Although the Exchanges will limit all applicable markets on the trading floor at these price levels, floor trading in lead-month primary futures markets at these price levels will not constitute a triggering event under new Rule 589. In all instances when a triggering event resulting in a trading halt occurs on CME Globex, the Exchanges will immediately halt floor trading in all contract months of primary futures contracts and associated products. The Exchanges will implement a coordinated temporary trading halt for any floor-traded associated products that are options on primary contracts or other associated products. When the Exchanges re-open CME Globex markets with expanded price limits, the Exchanges will simultaneously re-open all affected markets on the trading floor with the expanded limits in place.
Questions regarding this notice may be directed to:
U.S.
Joann Arena +1 212 299 2356 Joann.Arena@cmegroup.com
Miguel Vias +1 212 299 2358 Miguel.Vias@cmegroup.com
Youngjin Chang +1 312 466 4637 Youngjin.Chang@cmegroup.com
Fred Penha +1 212 299 2353 Fred.Penha@cmegroup.com
Europe
Sandra Ro +44 203 379 3789 Sandra.Ro@cmegroup.com
Harriet Hunnable +44 203 379 3704 Harriet.Hunnable@cmegroup.com
Anindya Boral +44 203 379 3738 Anindya.Boral@cmegroup.com
George Adcock +44 203 379 3737 George.Adcock@cmegroup.com
»
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I love the xag (1) and(4) hour charts. That trade looks primed for another leg higher. I also like those commodity currencies. I've done well buying those dips in aud/jpy & aud/usd.
The Aussie is basing out and banks are not going to stay short with a 2.50% yield on cash... Especially when the rest of the world is ZIRP. Central banks are finishing up rebalancing s/t debt for '14.
The Fed. isn't going to raise rates. The $usd is so overbought that any good news is priced in. The Fed meets next week and won't be hawkish over those low short term bond yields. (2-5 year UST yields) This " Ripleys Bullshit Or Not" higher rates crap is nothing but banter.
Agreed no raising of rates. I think rates get raised in generally two situations, no? 1) put brakes on inflation and 2) make your paper more attractive to investors. We don't have 1 and we don't really need 2 because the natural momentum is for scared money (of which there are increasing amounts) to flee into Treasuries and USD-denominated assets. That, and the fact raising raises would blow everything up.
Thanks for your comment.
How much more attractive can paper be? Look at stock buybacks, and subprime lending [real estate, cars]
Money is growing on tree's?
Smart money knows that the ONLY way they will be made WHOLE, is to take the DEFLATION loss on their INVESTMENTS, and buy bonds.
fAITH in .gov is running thin, but those bonds will be covered for " face value" lol
Ol'Putin gonna be laying the SMACKDOWN on the Paper Mutts.
Bring back the Bears to 'splain all this to me.
stack silver
eat seals...
repeat....
We are definitely living in interesting times!
Looking likely to get more 'interesting' really quickly.
Place your bets.
Yeah, the CME will limit up or down on a $400 move, but real world physical premiums will just adjust to compensate. The day gold moves to $800 is the same day US eagles will have a $500 per coin premium.
Who would really be bidding for paper gold in a panic.
The fights will be breaking out at the local coin store not through electronic trading.
My advice is get your's now and when things get ugly watch it online.
Buy gold, grab a beer, get a comfy seat, sleep with one eye open.
And a 9mm under your pillow.
Let's not forget whatever that crazy bump to $1400 was a week or so ago !!!
That bump was referred to in the article...
15:1 ratio will never be seen again. silver is the new "poor mans gold." gold will over shoot and silver will be playing ketchup. after the fraud is shaken out of the paper i think we are looking at 50:1 round abouts
That's ok I've got a lot of both ...... That's my Hedge.
Its always good to deversify
deversity is our strengf
That's diversitify.
based on what?
is this idle speculation, or do you have a basis for making that claim as though it were fact?
Criminals write the rules, regulations, laws and statues, clearly. Look at your statues on foreign llcs for your state as an example.
FiatFiatdeathdeathdeathdeath...
$400 daily limit could take crimex gold to zero in three trading days.
Or to 5200 in 10.
Could it not be instantaneous? Or closer to it? It is just saying the premium will make up the difference, no?
That's the intrinsic value of the vast majority of their (paper) gold
I'll give you a hint. It ain't going to be to the upside. Just sayin.'
and i'll give you a hint: you're speculating, and you don't know for a fact. you're just talking as though you do.
If that were true then they wouldn't need to implement it. They could just hammer it down with shorts. They are obviously more worried about an upside spike. I think its because we are near the end with the ability to short or we have a force majeur at either LBA of Comex or a breakdown caused by the retreat in oil causing systemic instability
^ Ding! Ding! Ding! Ding! Ding! We have a winner !
Correct me if I am wrong, but couldn't this force people to deliver gold at a less than market value. A confiscation of sorts.
I don't think so: "There shall be no special price fluctuation limits for an expiring primary metals futures contract during the period between and including the contract’s first intent day and the last delivery day."
1222=7
Christene Lagarde
The bitch was right!
12222014=14. "14, 2 times, 7" at about 2:20.
geopolitically this gold "price re-discovery" will be seen as the symbolic start of the rediscovering, re mapping of the geopolitical world. continued escalation. pieces will be coming off the chessboard. putin will make his move to re-assembe the russian empire.
So they're going to ring a bell when even the paper market has gone apeshit?
Every time a bell rings a banker gets nailgunned.
Well hand me some bells already, Goddammit!
first wipe out all the longs pushing the price at 800$ then 400$ then 0$ then let it bounce to 400$ 800$ 1200$ 1600$ 2000$ 2400$ etc...
This could be a problem with the paper market going into 2015??
“What do they know?”
… that we don’t.
Perhaps they are reacting to my article, What Price Gold… $7,000… infinity?
Ah, I’m probably just flattering myself.
But, what if…
The battle is gradually shaping up with the Comex getting prepared.It's physical delivery of Gold vs. Artificial or Synthetically paper traded Gold that can't deliver the Physical Gold,it eventually will only be able to deliver in fiat paper which will be considered to be another default.It doesn't take a lot of money anymore at these levels for a country to cash in some billions of U.S. Treasuries while The Dollar is high and step into the Gold market and make a big hard asset purchase.Any country in the new trading systems that both Russia and China have set up will gladly accept Gold or better still a form of Gold backed Notes where Physical Gold does not actually trade hands and it is only shipped on a very limited basis because of internal trade agreements signed.Gold is very liquid and has no counterparty risk.That's why it doesn't pay interest.It doesn't have to because Gold doesn't believe in Usury.Our whole monetary system is presently based on interest and then using people as modern day slaves with low wages.ie:WalMart.When you hold Gold,you are holding the truest Money.It just "IS".I would only measure it against farmland but not against fiat paper currency that has a record of 100% failure rate and must be continually multiplyied before eventual collapse.http://www.silverdoctors.com/
But more to the point, what will this do to the cost of Russian hookers? Great minds want to know.
Lol they are gonna need a Bigger handbrake than that to slow down the velocity when the shit hits...
possible scenario:
subsequent syndicate rule change = comex cash settle only
comex price goes limit down, other exchanges limit up as traders move positions
other exchanges declare cash settle and go down like dominoes
only ones left standing are asian physical exchanges who actually have the gold
catastrophic chain reaction ensues, current money system [ponzi scheme] as we know it ends, war commences.
the only man left standing is gold
Nobody said it yet? Gold bitchez!
Platinum, Bitchez!
Palladium, Bit-Chez!
Bitches, Bitchez!
An ounce of gold or a good hump... I know which way most men will swing.
An expensive hump. An ounce of silver soon
Boy, are they shaking in their shoes over gold (and silver) or what? Reality, folks. It's tough for them to face. They WANT to continue to control it. But for how long? ... how long?
Keep buying that xag Blyth. That 1 hour SAR line means there's serious resistance in the low 17's.
I'm long silver.
I read the article and took this away - one day there will be a 20 minute delay (4x5), but importantly the market will not close. So it seems like this will achieve pretty much nothing other than perhaps stopping a rogue algo.
The CME should be an independent government regulatory body not the owner of the market. Of course Fanny Mae and Freddie Mac haven't met my expectations either.
In any case, I applaud its recent announcement for precious metals.
you lose 30% when you sell bullion and the price hasn't fluctuated. There's no reason they couldn't ruin everyone fun, though, in the market...
Well Deus, you DO lose when you sell gold. You lose the long term stability and gain from owning it and keeping wealth in the family passing it down with no trace.
I noticed that someone has given everyone a down vote. I don't like being left out so I'm posting to get mine.
You need to post an intelligent observation to get "down-voted" on Z/H laddy.
I dealt you an upvote. ;-) I suspect MANY up-votes are coming your way soon. :-D
Two upvotes...
Probably someone from the CME or NSA or one of the 150 armed three letter agencies out there to protect us
They have been doing it on all day.
Whoop.....there it is!
"It's a Trap!"
Signed,
Admiral Akbar
$400 moves in gold????
I take it this means the gov will be passing their 1 trillion war-welfare budget before dec 21, probably shouldn't postpone it to when the population is likely eating the bark off of trees. This is a positive sign... it's the winter solstice even.
Yuan Has Real Shot at IMF Blessing on Reserve Status - bloomberg
http://www.bloomberg.com/news/2014-12-11/yuan-has-real-shot-at-imf-blessing-on-reserve-status.html
ZH has to stop bolding 25% of the words. The sweet spot is probably around 1-3 sentences. 25% is self-defeating. Moreover, they are doing it within sentences half the time. For what purpose? It doesn't help the reader skim the article because the reader can't skim half-sentences. So the reader still has to read the whole thing but now is distracted by the mindless bolding. If that weren't enough, they still make excessive use of italics and underlining. It never was a viable writing style. It undermines clarity as anybody who knows how to write can attest. And the fact that we have the internet now hasn't changed anything. All the energy that goes into the mindless highlighting would be much much better spent working on basic English syntax. Nothing ruins polemic more than bad syntax. Although mindless bolding comes close.
Lighten up, Francis.
"Any of you homo's.... touch my gold.... and I'll kill ya"...
Dude?! Tyler does that for us on the home page. Go eat a bag of chips.
Be nice, Aspergers is a tough disability.
Promoting price discovery by preventing price discovery. That makes sense. Not.
Why this? And why now? And why on such short notice? Sinister.
You just summed the article and entire thread in one succint sentence.
Four sentences actually but yeah.
0 sentences actually. I don't see any verbs at all.
Some folks got bailed in.
I really want one more 'season' to buy before anything happens. But apparently, someone is expecting things to happen sooner rather than later.
Oh well. If gold DOES start moving up, and I can no longer get it cheap, at least I got it while I could!
As to silver, well, seriously, I can't complain...it looks like a Viking hoard...
They provided contact numbers? SWEET!
"Hello, CME? Yes, I was wondering, if hypothetically I was the Peoples Bank of China and I wanted to take delivery of every single ounce of gold on the Comex, how would this new rule affect my closing price?"
Read the details. No limits on closing.
"There shall be no special price fluctuation limits for an expiring primary metals futures contract during the period
between and including the contract’s first intent day and the last delivery day. The Exchanges will also not call
temporary trading halts or an expansion of special price fluctuation limits for primary futures contract months or their
associated products during the last five minutes of trading between and including the first intent day and the last
delivery day of a related expiring primary metals futures contract."
I'm understanding this as the price will be what we say it is most of the time, but we're still allowed to smash the price down at the end of the month and there's nothing you're going to do about it.
You gotta man! Skype record it and post it to youtube. We need a website called funnymoney.com with all of this..
That $250 uptick in Gold a short while back was a test of the Emergency Fraudcast Alert System. I never did read if there was any faux explanation given. But I didn't really look either. Anyone know?
Communist price fixing here you come (sung to the tune of Calfornia here I come)
Seems appropriate in more than one way. Maybe feinswine can put on her black face and do her best Al Jolson impression while singing it. After all he was a communist just like her. That cesspool of a State is overrun with communists. She's all for stealing your guns and your gold and leaving you dead in a FEMA camp cement lined ditch
Personally my gold will sell when and for how much I decide. If there are no buyers at my price then I will not be a seller.
Paper is paper. Keep in mind it is what we wipe our asses with.
Wipe them out, all of them
http://www.youtube.com/watch?v=jmVyUdHtxbU (0:06)
Ya like RUSH? Here's a good one for ya. limelight
I prefer
https://www.youtube.com/watch?v=JnC88xBPkkc
The Trees
Man, that's good tunes.
There really is no accounting for some peoples' tastes. Rush... gross. Still, you are a phyz guy yeah? Not all bad then.
Something seems backward.
comex announcement translation: we will not let our fellow tribesmen be stopped out of a losing trade. the house and its minions will allways win.
delete duplicate
Translation: May I see your cards please before I place my bet?
How can this even work? They stop trading at whatever price that the last trade was made at and close. Overnight gold shoots up $401. The Crimex opens $402 over yesterdays price. They make one trade and close. Meanwhile elsewhere in the world the price is running away from the Crimex.
Level 4 silver 12.00???
I'm ready for a big takedown in the next few days.
So it appears the ratio should be about 33 to 1 gold to silver. Should bring silver back to 35, and then when gold starts to move higher the small increments in silver will be easier to control. 100/200/300/400gold-3/6/9/12silver
Keep the change Bitchez
An argument could be made that the ratio should be about 8 to 1 gold to silver price since that's about the ration of how much of each is mined in a year, i.e. gold is 8 times more rare than silver. And that's not really true since gold sticks around, where silver is used heavily in industry and is consumed and used up in many minute amounts, ending up unretrievable in landfills. So the ratio is something less than 8 to 1 of actual gold to silver available, inventories included.
Do they know there is a gold backed currency coming ?
Why all this fuss over a barbarous relic? And why not just change the margin requirements again to keep a lid on the price?
All I know is any drmatic change in volatility is unlikely to be on the downside so I can dance to this and I give it a "9".
So COMEX is the house and the house always wins because the house makes the rules. However, if I hold my gold/silver chips and not play the game, how the house wins?
Limits are so 1970s.
Pointless making a futures contract have limits when the cash market has none and is bigger. So you get stuck short and it's limit up bid. If you want out just pay the offer in the cash market. IB offers cash Gold.
This is what I read: "We're loing the abiliity to manipulate the price to whatever the fuck we want. We don't have much metal, so we came up with this new rule. Fuck you, we are the law and you'll continue to do as we say."
Why don't they just say, after they email their buddies, this is the metal prices today and no amount of volume or trading or shortages is going to affect it. Period.
Comex: whateva, we'll do what we want.
https://www.youtube.com/watch?v=BLPM-P7mNQw
Maybe gold needs to fall back to $35.00.
"Communist price fixing here you come"
Yes, but you see, even communists are not as powerful as markets. If not free markets, then black markets emerge. It is economic LAW. Look at that nutjob Maduro down in Venuzuela. Many a communist has been destroyed by markets, but markets will never be destroyed.
MsCreant- aspergers is a tough disease.
Yeah no shit!
http://m.youtube.com/watch?v=CY0Qjx5K53o
So if every CB and major developed economy knows everyone is fucked, could they be so savvy as to run down gold with paper while aquiring the real deal just to run it to the highest possible point in the paper market so then all nations debts will be settled in paper gold?
After all debts are settled the physical will then be used to back each nations currency using gold that is traded internationally via the SDR?
I know we are dealing evil people but even they don't want an angry mob with nail guns a coming for them.
Edit- this may also be the beginning of the end for the euro if this thesis is true. The big ? Is how does Germany get it's gold back? Does the US make a deal with china to give germanys gold back?
nuclear event will happen more or less around new year eve (plus minus two weeks)
right after that the financial turmoil
May tie in to Moody downgrade of money market industry.
http://www.cnbc.com/id/102264155
New Rule 589 prevents a low volume, Sunday night Putin backed melt up.
Silver's 17% last week was just a test.
Yup. Regulators making sure proces dont drop too fast. LMFAO
Clearly someone is expecting a lot of volatility in metals trading.
The question is in what direction?
Here are two potential explanations of the rule for each potential direction of the volatility:
Secenario #1) What if there was a shortage of exchanged metals, and the COMEX expected that shortage to become officially acknowledged, and well known.
- Before a metals shortage became more acknowledged, futures traders would place bets on the price rising. Those who had unfillable contracts already, would want that cash put into calls on the metal price to leverage their return, and/or to ensure they get more of what they need.
- The exchange would expect some metals to become available each day for trading (apparently discounting the idea that producers might decide to keep it on site expecting higher prices themselves). So, they make a rule that each day, they review the bids on lead-month calls and compare to the inventory, They use that information to set a price tripwire, such that if the price of the calls indicates that their metals will be drained, and some level of their settlement cash is consumed, they will stop trading. They would be implementing a rule like this to prevent a run on the metal that would break the exchange.
Scenario #2) The dropping oil price, combined with impending interest rate hikes is causing the dollar to rise too fast. They expect that oil producing nations will need to sell PM assets in order to meet current accounts, driving PM prices down.
- The exchange would expect that sharp downward price fluctuations would, similar to scenario 1,cause a rush of put contracts - also potentially lead by HFTs - that would quickly result in a deflationary flash across markets. So they implement a rule where they monitor the leading month put contracts and compare that to their current PM receivables to establish a trip-price. If the price crosses the trip-price then they shut down trading to limit the downside losses.
You decide which scenario is more compelling.
Given the German, Netherlands, and Brussels repatriation requests, combined with the announced mint shortages, I lean towards scenario 1.