With gold holding gains over 6% year-to-date (and the best performing asset-class), this morning's silver slamdown has taken the precious metal notably into the red for 2014 (-2%) and makes it the worst performing asset-class. Silver is back under $19 and near its lowest price since July 2013. Of course, it all started with the futures market where the sudden fiduciary need to dump over 2000 contracts 0505ET sent the complex collapsing, sending the gold-to-silver ratio to its highest since 2010.
Silver near 9 month lows...
Someone was in a hurry to dump their silver this morning as we gapped lower in spot
as it started in the futures...but no limits triggered
As the gold/silver ratio hits its highest since 2010...
We mentioned the limits because apparently even the CME has finally noticed the increasing frequency of these idiotic, and clearly manipulative market moves, in which the seller has no interest in best price execution, but solely in moving the market. To wit:
U.S. futures exchange CME Group Inc is considering the introduction of daily limits on price moves in gold and silver futures in a bid to rein in wild volatility that has spooked investors in recent years, a CME official said on Tuesday. CME at present has price fluctuation limits for futures contracts in some energy, agricultural commodities and financial products, but none for its precious and base metals products.
The possible move reflects growing concern at the largest U.S. exchange of futures and options about big bouts of buying or selling that have caused huge fluctuations in prices without any apparent fundamental reason.
"We don't have price limits in gold and silver. That's something that we are looking into," Miguel Vias, CME Group's director of metal products, said in a panel discussion at an industry event, in response to a question about how the exchange protects investors from excessive volatility.
U.S. exchange operators are already edgy about allegations over high-speed traders rigging the Wall Street stock markets and the so-called dark pools, or trading outside of exchanges, in the wake of the recently published book "Flash Boys: A Wall Street Revolt," by Michael Lewis. The biggest concern for the exchange is the array of sophisticated trading programs that are capable of significantly pushing the market higher or lower, Vias said.
Get out of town!
Unusually big moves and the fears of price "slippage" - the difference between the price at which a market player wants to execute an order and the price at which they are able to do so - have turned some gold and silver futures investors away, he said.
But not the central banks, which take daily delight in manipulating the prices of gold and silver, either through the BIS or fixing banks, just so no fingers ever point toward them.