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Today's $1.24 Billion Targeted Gold Slam Down Makes The Mainstream Press

Tyler Durden's picture




 

For the first time in what may be ages, a phenomenon that has become near and dear to anyone who trades gold, and which at best elicits a casual smirk from those who observe it several times daily, we find that the WSJ has finally picked up on the topic of the endless daily gold slam down, where the seller in complete disregard for market disruption (because in a normal world one wants to sell any given lot without notifying the market that one is selling so as to get a good price on the next lot... but not in the gold market where the seller slams the bid with reckless abandon) ignores market depth and in a demonstration of nothing but brute price manipulation force, slams every bid down just to demoralize further buying. Naturally, that this simply provides buyers with a more depressed price than is "fair" is lost on the seller, but not on the buyers who promptly bid up the metal as attempt to demoralize buying end in failure after failure. Yet it is peculiar that today, for the first time, the intraday gold slam down has finally made the MSM. To wit: "The CME Group Inc.’s Comex division recorded an unusually large transaction of 7,500 gold futures during one minute of trading at 8:31 a.m. EDT. The sale took out blocks of bids as large as 84 contracts in one fell swoop and cut prices down to $1,648.80 a troy ounce. The overall transaction was worth more than $1.24 billion... 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." Well, no. It wasn't.

Because if it was, by that logic the gold market falls prey to a fat finger every single day, often times 2 or 3 times a day. But because gold market participants have learned that complaining to the CFTC about this kind of manipulation has no impact, and because at the end of the day it merely provides a cheap reentry price, most have grown to love and anticipate these kinds of moves. In fact, we can only hope that the CFTC and SEC ignores this WSJ update, and lets the market keep on keeping on without changing anything. Because otherwise who will provide the depressed price levels that permit conversion of worthless paper into Fed-detested, undilutable barbarous tradition?

From the WSJ:

One indicator that the transaction was a mistake was its size. At 750,000 troy ounces, such large trades are rarely conducted amid very thin trading volumes. Monday trading was expected to be quiet as market participants in China and Japan are out on holiday and many European traders are preparing for a holidays there

Attempts at manipulation are getting so glaringly obvious, not even the MSM pretends to believe them:

“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. The collateral required to purchase 7,500 contracts is about $75.9 million in cash that the trader would have deposited with his broker.

 

Moreover, the likely mistake is symptomatic 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 stood higher chances of being intercepted, traders said.

 

“You would definitely verify [a trade this big] before you executed it,” said one Comex floor broker.

Sorry Citi, but it was not a gold finger:

not everyone agreed Monday’s slip in gold was caused by a keystroke error. Chuck Retzky, director of futures sales for Mizuho Securities USA, said that silver prices suffered a similar leg down at the same time as gold, tumbling 35 cents to $30.805 a troy ounce, but other markets like Treasurys, currencies and stocks were unperturbed.

 

“To do it both in gold and silver tells me that it wasn’t a trade done in error,” Retzky said. He added that the sale could have been caused by a trader looking to cut back holdings on the last trading day of April, as fund managers often time purchases and sales for particular reporting periods.

Or, it was made by a trader at the BIS, whose job is to crush credibility in gold, and who describes himself as a market maker for central banks for all gold products, and who holds and manages proprietary positions on all currencies including gold (so wait... gold IS a currency according to the BIS? Gotcha).

Where have we seen this before? Oh yes.

As for gold...Dont cry for it Argentina... or try to nationalize it for that matter: that is an honor that is expressly reserved for the second teleprompted coming of FDR, and the second coming of Executive Order 6102.

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Tue, 05/01/2012 - 00:31 | 2387437 BlackholeDivestment
BlackholeDivestment's picture

...man NT, I thought I was weird. Very strange post there bud. Even stranger was, before reading this thing on gold and looking down at the comments, finding your wild bullshit, I just came by this right before hand. http://www.tribulation-now.org/2012/04/27/may-20th-megaquake-syzygy/ ...little freaky man. Woooo spooky.

Tue, 05/01/2012 - 01:16 | 2387471 NewThor
NewThor's picture

Good find.

Yes. I'm tracking the eye on the May 20th Serpent's eclipse alignment megaquake.

People need to remember there are things in the universe that are way more powerful than money. Bitchez.

Mon, 04/30/2012 - 19:48 | 2386913 Doña K
Doña K's picture

@ Seek;

What if they do this a few times and then the next time they take it way down during a down market? Then all of those who used the first or second break as a buying opportunity get locked in forever with either a margin call or decay of their calls, or expiration of the calls.

It happened a few months ago. I held up as I was long gold short silver at 10 to 7 ratio knowing that when gold tanks, silver tanks as much as 2-3 times on a % basis. I actually did better than breaking even.  

Now that I posted this though. They know. So thinking that they may reverse this and tank gold twice as much as silver, I may go long silver and short gold at 10 to 7 ratio. See if you can get me suckers.

Mon, 04/30/2012 - 19:56 | 2386933 disabledvet
disabledvet's picture

SPECULATOR!

Mon, 04/30/2012 - 20:05 | 2386954 Doña K
Doña K's picture

My Boxter is getting old. Just ordered the new model on a European delivery for the summer in Marbella. Hubby and I will have a blast.

Viva Zuffenhousen  

Mon, 04/30/2012 - 21:05 | 2387074 oddjob
oddjob's picture

Whatever, Ms. Ironbox.

Mon, 04/30/2012 - 21:44 | 2387173 seek
seek's picture

Taking the market down just shakes out the so-called "weak hands." They've done this so often there are no weak hands. That's why we're seeing them dump $1B instantly, taking huge losses, and the market recovers in hours.

All selling into downward momentum does is temporarily distort the price -- going from $1900 to $1600 knocked out the weak people, and I'm sure that there's a meaningful part of the market such as myself that's not just a strong hand, but an iron hand. They'd have to knock AU down another $1,000/oz before I'd be below break-even. Realistically, they'd have to hit it down to probably $1,200 to scare people off, but anyone that's looked at the financial situation of the developed economies knows that $1,200/oz gold is free money. I would imagine anyone holding dollars would go completely nuts buying on a hard down strike.

Seriously, though, from the trades you are describing it sounds like you are playing with paper gold. That market is going to zap plenty of people on both the long and short sides when it finally breaks, MFG was just a warm-up. I hope you have great timing, because counterparty risk is a bitch when it comes to gold/silver. If you're banking your profits into physical, more power to you, but be careful.

Tue, 05/01/2012 - 00:48 | 2387453 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

Never leave us, seek.

Tue, 05/01/2012 - 00:22 | 2387428 Nage42
Nage42's picture

"Their next move" is likely to be around confidence of purity (something the average person can't verify).

Next time some major player withdraws their physical, the stock will turn out to be tungstun impregnated.

Two birds with one stone:

  • Punish the person for pulling out their chips
  • Worry everyone that "it's better to stay in paper," cause no one can call something virtual as "false" -- LOL!

That's my guess anyways.  If you can't force people in the direction you want them to go, you have to punish them when they don't follow... typical current government.

Mon, 04/30/2012 - 18:57 | 2386785 SHEEPFUKKER
SHEEPFUKKER's picture

Stack the smack!!!

Mon, 04/30/2012 - 20:04 | 2386953 nmewn
nmewn's picture

Exactly.

Mon, 04/30/2012 - 19:11 | 2386821 Dr Benway
Dr Benway's picture

So its a billion dollar trade to depress the price of gold by 1% for a few hours. Costing a dozen million dollars or so.

 

Sounds so stupid I almost can't believe it. Or maybe in the new world we live in, it's so stupid that its true.

Mon, 04/30/2012 - 19:36 | 2386891 SheepDog-One
SheepDog-One's picture

Theyre pretty damn desperate at this point.

Mon, 04/30/2012 - 20:18 | 2386981 Poor Grogman
Poor Grogman's picture

Damn well missed bottom ticking the low AGAIN.... Another good entry point though.

Oh well maybe next time.

I'm loving this PM bashing, keep it up boys, theres plenty of unfortunate canoe accidents just waiting to happen..

Mon, 04/30/2012 - 22:04 | 2387205 Dr Benway
Dr Benway's picture

I'm thinking at some point this actually becomes counterproductive, i.e. the market interprets the manipulation as a sign of desperation and thus bullish for gold.

Mon, 04/30/2012 - 22:50 | 2387286 Poor Grogman
Poor Grogman's picture

works for me

Mon, 04/30/2012 - 23:04 | 2387321 DaveyJones
DaveyJones's picture

Good point. That's the overwhelming theme to this collapsing empire and most others. Thinking you're outsmarting the others, hoping they don't realize how weak and worn down you really are. Praying they don't call your bluff.

Tue, 05/01/2012 - 08:33 | 2387742 Mesquite
Mesquite's picture

Appreciate the comments...

Ha Ha..

"Skunk bid rules...' ""

Mon, 04/30/2012 - 22:05 | 2387206 Dr Benway
Dr Benway's picture

double post

Mon, 04/30/2012 - 20:08 | 2386962 Doña K
Doña K's picture

It's just digital money. Just like in the casino plays with plastic chips (derivatives). The actual FRN's are already in the casino's vault.

Mon, 04/30/2012 - 20:35 | 2387014 TheFourthStooge-ing
TheFourthStooge-ing's picture

.

So its a billion dollar trade to depress the price of gold by 1% for a few hours. Costing a dozen million dollars or so.

Sounds so stupid I almost can't believe it. Or maybe in the new world we live in, it's so stupid that its true.

'They' refer to such operations as Krugmanization.

 

Tue, 05/01/2012 - 01:38 | 2387480 AustriAnnie
AustriAnnie's picture

So what we are seeing is "diminishing marginal returns to Krugmanization"

Mon, 04/30/2012 - 19:57 | 2386934 JustObserving
JustObserving's picture

And what will the CFTC do about it?  It has done nothing about numerous such events in gold and silver.  Silver was also crushed when gold fell today at exactly the same time.

Regulators exist only on paper just like most of the precious metals traded in the US.

Avoid the corrupt US markets.

Tue, 05/01/2012 - 00:04 | 2387413 lewy14
lewy14's picture

The distribution of 1 minute returns exhibits excess klepto-kurtosis.

Mon, 04/30/2012 - 21:04 | 2387071 trying to make ...
trying to make sense of it all's picture

Here's a fun little ditty. So, today I'm in my local, small town coin shop buying my monthly budget of gold coins. In walks a very unassuming looking gentleman and leaves with 300 oz of gold coins. Hmm, I don't think he was affected by today's manipulation. The coin shop owners said it was a gold buying day. More and more people are just keeping their heads down and BTFD.

Mon, 04/30/2012 - 23:59 | 2387408 Swarmee
Swarmee's picture

I call BS. What 'small town coin shop' sells $495,000 in physical gold in one day?
Either your definition of small town = NYC, or 300 oz is hyperbole.

Tue, 05/01/2012 - 03:10 | 2387541 trying to make ...
trying to make sense of it all's picture

No BS Swarmee. The shop owner had to order it and the gentleman was picking up. Simple as that. I guess strange things do happen in my town (population 100,000)

Tue, 05/01/2012 - 00:10 | 2387418 Mad Max
Mad Max's picture

A local, small town coin shop with over 300 oz of gold coins in inventory?  Color me skeptical.  And a buyer who's just walking in for that purchase, not getting it delivered from a major outfit with more inventory and lower premiums.  Sure...

Mon, 04/30/2012 - 22:47 | 2387281 sof_hannibal
sof_hannibal's picture

can't bring down real value... no matter how hard they try

Mon, 04/30/2012 - 22:54 | 2387296 DaveyJones
DaveyJones's picture

as long as the day ends with fuck you Bernanke

Tue, 05/01/2012 - 00:49 | 2387455 FFox
FFox's picture

Perhaps those nations and others investing (invested) in gold are large enough and pissed enogh to make a friggin stand.... at last mates!

Now we ride!

Tue, 05/01/2012 - 01:45 | 2387483 AustriAnnie
AustriAnnie's picture

On the other hand, they might just enjoy taking advantage of such manipulation as a chance to buy more.

Why would they "make a stand" if PM manipulators are subsidizing their PM buying habits?  Last thing they want is to end the PM-buying-at-depressed-prices party.

Tue, 05/01/2012 - 04:57 | 2387572 Clashfan
Clashfan's picture

precisely

Mon, 04/30/2012 - 18:28 | 2386711 GetZeeGold
GetZeeGold's picture

 

 

The subsidized metals markets are the only government program that's ever worked for me.

 

Mon, 04/30/2012 - 22:32 | 2387248 Tijuana Donkey Show
Tijuana Donkey Show's picture

It's about zee price stability....

Mon, 04/30/2012 - 19:35 | 2386887 in4mayshun
in4mayshun's picture

I bet all these wall street posers feel pretty smug everytime they're able to take PM's down a notch. Little do they know that savvy eastern investors are methodically emptying out the remaining physical stocks of gold. Everyday they suppress prices they are ironically bringing themselves one day closer to their demise.

Better get yours while you can still afford it!

Mon, 04/30/2012 - 19:48 | 2386914 Muppet Pimp
Muppet Pimp's picture

Thanks guys, one day when the smoke clears we all look forward to your interview on 60 minutes

Can't wait to hear the ins and outs of China's role

Dis: Long Orville Redenbacher

Tue, 05/01/2012 - 08:16 | 2386693 GetZeeGold
GetZeeGold's picture

 

 

Was Blythe pulling the levers

 

She's gonna rip your eyeballs out for that Muppet!

 

Mon, 04/30/2012 - 18:37 | 2386741 ihedgemyhedges
ihedgemyhedges's picture

TD, please don't show us any more pics of BIS people unless they look like the Talent Manager you've shown previously..................

Mon, 04/30/2012 - 18:58 | 2386792 Robot Trader's ...
Robot Trader's brother's picture

or the girls shilling T-shirts in the sidebar ads..........

Mon, 04/30/2012 - 19:25 | 2386855 chet
chet's picture

I do love how this guy is claiming to basically run global finance, but his photo is a 20-year-old in a hoodie.  God help us.

Tue, 05/01/2012 - 02:23 | 2387512 The Navigator
The Navigator's picture

same punks straight outta bidnis skool that claimed to know something about business in the dotcom bubble.

Mon, 04/30/2012 - 19:20 | 2386846 Peter Pan
Peter Pan's picture

Let's be reasonable and admit that government is being even handed. They do after all also manipulate inflation statistics, unemployment statistics, the stock market, government agencies, courts etc. This is why Chris Powell correctly said that there are no more markets just manipulations.

MAnipulation is the last refuge of the defeated, the evil and the incapable.

Mon, 04/30/2012 - 22:19 | 2387228 Gringo Viejo
Gringo Viejo's picture

Matters not. The real metal (gold & silver) is flowing to the East. And just like the American jobs that flowed East....they ain't comin' back (thanks Bruce). Game, Set and fucking Match!

Tue, 05/01/2012 - 05:44 | 2387587 jmcaule4
jmcaule4's picture

If you guys like Zero Hedge, Alf fields, King Worlds News etc then you'll like my blog!

Check it out!

http://jmcaule-whatimlookingatrightnow.blogspot.ca/

Cheers,

jmcaule

Mon, 04/30/2012 - 18:19 | 2386679 fourchan
fourchan's picture

i like the every day manipulation at the open of ny trading.

today it looks like the manipulators took one in the keister.

very powerful move from the freemarket, pushing gold right back up.

Mon, 04/30/2012 - 18:29 | 2386721 CIABS
CIABS's picture

Right, the cartel got "stuffed".  Hooray for us.

More likely their basis had improved by the end of the day, and some of the good guys were stopped out.

Mon, 04/30/2012 - 18:18 | 2386683 Kaiser Sousa
Kaiser Sousa's picture

bitch ass pathetic bankers...

it dont matter...i aint selling one fucking once of metal...

keep giving me the chance to stack at these fake ass paper prices u sociopathic fucks...

just showing how desperately fucked u and ur debt coupon green pieces of shit are...

FUCK ALL BANKERS, THE DOLLAR AND THEIR BITCH OWNED POITICIANS...

i'm Kaiser Sousa and i approved this message...Silver Bitchez.....................

Mon, 04/30/2012 - 18:27 | 2386709 fourchan
fourchan's picture

i second.

Mon, 04/30/2012 - 22:26 | 2387237 Tsunami Wave
Tsunami Wave's picture

I couldn't have said it better.

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