It is difficult to get any sense of perspective when viewing the chart on a one second time frame so I am putting up another one with a big longer time perspective on it so that you can see just how large the number of contracts that were that traded.
Here is a 20 second chart - notice how the volume on the recovery higher exceeded that of the volume on the way down.
I must say that the speed at which this thing recovered makes me suspect more of an erroneous trade than anything. Open interest readings in gold showed a sharp drop of some 6,243 contracts in the most active February contract in yesterday's wild session. Overall volume was not particularly high given the huge sell order that hit the pit around midmorning EST. It came in at a mere 158,991 on the screen. Combined with the pit trade volume, it did not even make it 200,000. That is not large by comparison to other heavy volume days.
If this was a fresh sell order which was met by fresh buying, we would have seen it by an INCREASE in the day's open interest. We did not get that.
One thing I can say from looking through the data was that some short-term longs were kicked out of the market on the plunge lower as their stops were hit so we obviously got some decent sized long liquidation. But that long liquidation must have been met by some short covering as well.
Here is the other thing I can say from going through this stuff - the sell off occurred at a key technical price level on the chart. Gold failed to extend higher as a result. The price fell to, but did not break below initial chart support near $1225 or so - YET. If it does, the support zone that brought in buying yesterday was near the $$1210 level will need to hold to prevent a retest of psychological support at $1200. The mining shares are holding up which should give the bulls some consolation. That will need to continue.
Where gold goes from here is anyone's guess at this point but keep in mind that on the intermediate term chart, the bears remain in control of the market until PROVEN otherwise. The weekly chart shows a downturn in the ADX indicating a break in the downtrend but negative directional movement ( RED LINE ) remains above positive directional movement ( BLUE LINE ). Bearish forces dominate as long as that is the case. The level near $1180 is critically important!
Your observation that the Gold/Silver stocks ( especially mid-tier ones like IAG, KGC, HL, FSM ) did not crumble--they reobounded well. A non-confirmation ? Well, need to watch this for a few more days.
ReplyDeletea mistake ?? more like electric invisible wire to keep the bulls at bay , and one first shock to for the year to create a trend … who in his right mind would dare to buy comex above the 1248 mark ?? this is blatant intervention , let alone manipulation . I would understand your point of view if this was one isolated event , unfortunately is not . What makes my head spin , is how long this thieves will be doing this taking into account how little gold remains at comex … 4000 contracts at 100 oz …. do the math , then translate it to the stocks at comex … its not that hard .
ReplyDeleteAnon;
Deletethe gold stocks at the Comex do not mean anything as long as there is enough gold to meet the demand of longs who are willing to take delivery of it. Morgan has been the big buyer of the metal however so they are using hedge fund selling to acquire it. They are not fools but they are also able to buy that gold because they have a longer range view of things than the hedge funds who are more short-term oriented.
What other "events" are you speaking of? This was an isolated event. It was a flash crash that resulted from a large order that hit the pit; one that was so large that it is extraordinary. Can you point to any other fairly recent "event" that even remotely resembled what happened on Monday? No, Anon, you cannot.
Also, during the entirety of the bull market in gold, which ended two years ago when $1530 gave way, there was not a single day that I can recall in seeing some like this - when a large sell order of immense magnitude hit the screen in one second knocking the price down some $30 which was IMMEDIATELY followed up by buying that completely erased the loss and actually moved the price back to the plus column at one point. IN a ten year period I never saw any such thing... what I did see was large sell orders that overwhelmed the bids which forced the price down and TRIGGERED A SERIES OF SELL STOPS FROM WHICH THE PRICE DID NOT QUICKLY RECOVER THAT SET THE STAGE FOR LARGE SCALE LONG LIQUIDATION ON THE PART OF HEDGE FUNDS.
Right now you have a theory that you unfortunately cannot prove my friend. Let me ask you a question - which entity/entities are large enough to bid the price of gold back up some $30 in MERE SECONDS after a $30 crash in price? Is it hedge funds? Is it bullion banks? IF it is hedge funds, please explain to me why it is not price manipulation to the upside? After all, who would chase prices and pay that kind of money for gold when they knew that there was a supposed aggressive seller just waiting to clobber prices right above the market? If it was bullion banks ( which I believe it was) who were doing the selling and jamming the price down, how were they able to buy all those contracts back right away. They certainly did not make any money on any short positions put on because the price recovered too quickly to buy in that size. Also, if they put on NEW SHORT positions and sold the market to knock it down and then came right back in and bought them all back, the open interest would not have changed a bit - it would have all been a wash.
anon;
Deletecontinued from part one reply:
If they were selling out of existing longs, then open interest would have decreased, which it did but then who brought the market right back up again? If hedge funds were adding new longs, it would have shown up as an increase in open interest. Open interest however went DOWN, not up. So that is not an option.
If hedge funds who were short, came in and bought the market, then the open increase would have decreased, which it did. So who is manipulating the price? Hedge funds who were short and then bought back the shorts put on with a 4000 sell order? Then it is hedge fund manipulating the gold price and NOT the feds. so who was doing the selling anon?
Answer - I believe it was a mistake triggered by a bad order but it really does not matter. What matters is what the gold price did subsequent to the order. If those who want to buy the metal see value in it above $1245 they will come in and buy it regardless of what transpired on Monday. If they no longer see value at these levels, but are hoping to buy it at a lower price, then they will pull back and wait for that to happen.
Look - if you are interested in owning gold to protect against what some of us feel is eventually going to come our way, then welcome the opportunity to acquire the metal at a lower price and forget about trying to figure out what. Just buy the metal and put it away. it is we traders who have to deal with the wild swings in price and try to read and decipher what is taking place.
Best to you
anon;
Deleteby the way, just for clarity's sake - I believe it was bullion banks who did the buying yesterday that took the price right back up after the 4000 lot sell.
Dan ,
Deletethank you for taking the time , really appreciate it . You are completely right , what happened on monday is an isolated event , nothing like that has happened before , and I agree that all the selling we saw throughout the year were scaleted orders just as you described , so perhaps someone intended to scare the crap out of all the longs for the eleventh time and instead of hitting a 1 they hit a 4 , I agree with you nobody ever sold 4000 contracts like that . One thing is for sure , if it was a hedge fund making the mistake , and the bullion banks taking advantage , depending on the size of the hedge fund we may have a dead man walking out there and we shall find out soon enough !
I really appreciate the explanation regarding the fact that it wasn't a wash , because that is what I am most concerned about .
What I don't seem to grasp though is the fact that you are not more worried with the actual situation at comex .
Just so you know , I trade comex very little , only at the edge , and with very tight stops , I am more into miners such as MUX , TRX , LSG , small caps anyway that I am buying here and there .
Thank you again for taking the time , I was convinced this was a wash , but now I can see it is not the case .. its just unbelievable that the shit doesn't stop coming , at least the miners are somehow performing if you can call it that , lets see for how long …
All the best to you too buddy
according to Jesse claims per oz stands at 80 …. go figure who is backing those 4000 contracts dumped in just a few seconds
ReplyDeleteDan, this is just for the sake of argument. Let us assume that all or most of the gold stored at Fort Knox is gone. Would that matter at all to the hedge funds, whether they are selling gold for their own account or someone else's, who seem to have big bearish bets at this time?
ReplyDeletearnie;
Deleteit would not matter to hedge funds who trade in paper. keep in mind that hedgies rarely if ever take delivery of anything. They just roll the position into the next month or next most active month and do it over and over again.
As long as they can exit a short position, and do not have to make delivery, they can keep this up indefinitely.
the hedge funds are playing russian roulette , this should matter and very much to the CFTC but what the hell , if we are printing trillions what are a few billion here and there to bail these fuckers out once the shit hits the fan . Fort Knox is an entirely different subject or that is what I want to believe , I really want to agree with Dan that the Fed has nothing to do with this , because if they do , its not only real dumb but also the implications are humongous , don't know if I spelled that right , hopefully the spelling genius is fast asleep , If the mob were to find out there isn't any gold left at Fort Knox , Bernanke and co. better run , because what they did to Caucescu is going to seem like a deep tissue massage … Sorry for the rant , will try to control myself in the future .
Deletewell Dan … as long as they can exit and don't have to deliver is a big ask , don't you agree , if they trade size , how the hell are they going to get out ?? we saw gold move 30 bucks in one second to the down side , on a market that is short … what would have happened if the move had been to the upside ??? and guess what ? nobody is selling … you said this before make delivery or go home ,. The CFTC is playing with fire here imho … ok I shut up now
DeleteDan , look today at 10.37 am europe time , probably hedge funds selling in a more controlled fashion , then bullion banks buying the dip , it would be interesting seeing the 20 sec chart with volume traded .. best
DeleteThe canary in the coal mine is silver. Silver falling out of bed, does not bode well for gold. Regular markets being up will draw money out of miners in a knee jerk reaction. Someone is going with the flow, not sure if it is the government or banks' computer programs but the little people don't have the excess cash to play the markets right now.
ReplyDeleteSoon China will begin dumping some gold for oil and maybe food depending how weather affects farming there in the near future.
Trend in gold in still down with the usual swings but looks like selling into the highs for cash to move elsewhere is happening. And why not? Better returns in the regular markets to be had. Doesn't really matter why at the moment even if the economy is lethargic.
Haven't seen the final retail numbers yet for xmas sales. Not to worry. Stores preordered less stock this season and I doubt they are stuck was much leftover inventory which would be a real loss.
Why would cHina dump gold when they are buying aggresively and seem intent on hoovering up the crumbs? More likely they would dump soon to be worthless US treasuries which they are currently drowning in surely?
Deletesorry, i see this question was asked below
DeleteWhy would the Chinese dump gold when they can dump USD ?
ReplyDeleteDon't forget that the USD is the only pig with lipstick and the Chinese have more than what they want, as long as the rest of the fools on the planet accept it as payment in exchange for hard assets the Chinese will oblige.
They are not stupid.
China used some excess dollars to buy gold but have cut back on buying US paper. The US$ will strengthen for the next couple years and since everything is still priced in US$, China will be stuck in a hard spot for major purchases from the US. China is by no means ready to rule the world yet. Some bad harvests, nuke accident, misadventures politically, will upset their applecart.
DeleteDan,
ReplyDeleteis there anyway of seeing whether that initial 1sec sell of 4000oz was a single seller?
And if so would it have breached comex set limits?
What are those limits?
many thx
Gold and silver now imploding after the ADP report which shows the economy booming.
ReplyDeleteYet another blown call from the 'Terrifying Collapse" crowd and the "This Is It!" group.
All the guys who got out of the system are now feeling massive pain, realizing their huge error.
LOL.....
This comment has been removed by the author.
DeleteMark, paradoxically, S&P/Dow are up because (depending on who you read) money is getting out of the system in Europe, deposit institutions, etc.
DeleteHigher P/Es are just a “One sign that things are becoming more popular is they’re more expensive," according to Michael Shaoul, on Bloomberg. I'd imagine that P/Es are only going to get higher as nearly 50% of the S&P 500s revenues are derived from foreign sales...(for big IT companies it's over 50%). Demand for dollars to get into US equities drives P/Es up higher by both making stocks "more popular, yay" and by deflating cash flows in dollar terms.
Irregardless (wink), follow the price action, all else is navel gazing.
It is very evident by Mark's repeated posts that he previously lost a massive amount of money in gold and silver. He most likely is a long-time investor that probably continued to add in instead of sell off during golds $1,800 run. He is extremely bitter and angry at gold and the gold community, specifically the permabull crowd, and that can easily be seen in his posts. Better luck investing in the future Mark. Read the markets at face value and leave your ego/presuppositions and the door and you should do alright going forward. Best of luck going forward.
DeleteMe thinks you are projecting jon.
Deletehttp://www.thecactusland.com/2014/01/gold-will-break-below-960-its-in-script.html
ReplyDeleteThis blog writer gets what I have been saying all along. I still own a lot of gold and will continue to do so, especially when the price targets are hit.
Is it a conspiracy held in a board room? Not at all. It is directive number one of the globalist-owned central banks to keep everyone in the system, so that we can all share in the paper collapse together. I can see the scenario as the media says that we all need to love one another even though we are bankrupt. But the COMEX is a great tool for long gold holders, as it provides the cheapest means to hedge gold. Plus we can plow our hedge profits back into more gold.
When China strikes against the west in about 7-9 years, the ChiCom govt will recall private ownership of gold and make a dialectic currency to the dollar. They will have much of the gold by then, and will tell their citizens it is their patriotic duty to do so.
Bottom line is that XLY, XRT, XLF, etc. are still pinned at 5-year highs with no signs of backing off.
ReplyDeleteCommodities continue to implode and higher bond yields have no impact on stocks whatsoever.
Peak Oil, Resource Scarcity, Hyperinflation, Dollar Collapse are all gloom and doom theories designed to allow the Carnival Barkers selling newsletters and holding Q & A sessions to steal your money.
Stay in the System.
Wow, "selling barrage" just hammered the crude oil futures.
ReplyDeleteDespite the polar air blast, heating oil and natural gas futures continue to plummet.
More proof that increasing amount of monetization and continued Treasury purchases by the Fed sends commodity prices into vicious bear markets.
There will never be another recession again, since Yellen now can print even faster at the slightest hint of a slowdown in the leading economic indicators.
If Peter Schiff, Greg Hunter, Gerald Celente, and Jim Willie had only recommended:
ReplyDeleteFacebook
Yelp
Amazon
Twitter
Their worries would have been over a long time ago....
Check out those charts, simply breathtaking.
LOL...
Dan, long time reader here, 3 years and counting, i sincerely appreciate your input as a trader!
ReplyDeleteThe fact that it gape down so badly i think its telling us something. Gold tends to announce its moves in advance, one way or another. More on this later.
Anyway, the question i have is - and this could be pure gibberish - do you think there what we observed could be a part of a more complex trade, a tip of the iceberg so to speak, where potentially the losses are offset by even larger gains in derivative/other instruments?
Any ideas on what the other arm of this trade setup could be? Options market comes to mind.
AM;
DeleteGenerally speaking, most professional traders are usually spread.
You can safely say that there will be some offsetting positions elsewhere to mitigate their market risk exposure. A lot of trading involves managing those spreads.
Complete wipeout in DBC thanks to massive liquidation in energy products today.
ReplyDelete18 months worth of longs now in a losing position.
The consumer must be celebrating with utter glee.
No wonder XLY and XRT refuse to back off from world record highs.
XLY remains the most fantastic 5-year run of any major sector ETF in world history.
Absolutely no reason to own gold right now.
No inflation.
Zero
Nada
Zip
Dan:
ReplyDeleteThank you for taking the time to re-explain the significance of the reduction in open interest. I missed it the first time. Really appreciate what you do for us.
Don't let th grind you down.
Next Q & A is in Ashville, NC
ReplyDeleteDon't forget to send in your $100, LOL!!!!
Order up that compendium
Gold might make it below $1,200 by then, maybe silver down to $18.
Crude oil around $88 next week?
It's all good, everyone is partying, McKesson, Molson/Coors, Constellation Brands, all the other beer and liquor stocks making world record highs today.
"But Any Minute Now, I Swear!!
Its all going to be crashing down!!!
Mark:
DeleteHere's a guy that really knows his stuff:
Another SILVER genius
Maybe its because they actually produce beer and liquor and have licenses to do so and are run by insiders that didnt sell over 20% of the float since 2002.
ReplyDeleteDan ,
ReplyDeleteThis is from ZH
http://www.zerohedge.com/news/2014-01-08/proof-golds-latest-slam-was-not-fat-goldfinger
best
Anon;
DeleteGuess what - regardless of who did the selling (the conspiracy theory guys always blame the nasty bullion banks, particularly JP Morgan and Goldman) the BIG QUESTION is WHO BOUGHT the Gold and moved it back up within seconds completely erasing the losses? Was it the bullion banks? After all, they are the ones who have been taking delivery of the gold and have been long for some time now. If they did, then any opportunity to profit was basically erased in mere seconds because the price did not stay down long enough for anyone who sold over 4000 contracts to buy them all back and make a profit based on the speed at which the gold contract reacted higher.
If bullion banks are net long gold, then the selling must be from someone else, and not the usual suspects that the gold conspiracy crowd is always blaming. After all, their contention is that the bullion banks are proxies for the US feds who want the gold price suppressed and do the gold selling for the fed. If the bullion banks are buying, which they have been, then we now have a situation where the hedge funds must now be the agents of the feds and it is they who are doing the selling to suppress the price of gold on behalf of the feds for whom they must now apparently be working.
All this leads to is chasing one's tail and going nowhere. I maintain this is a software error and that gold is moving lower because that is the direction of its main trend right now and the price of commodities as measured by both the GSCI and the DOW JONES/UBS index is sinking.
Look at what happened to the grains and the energies in today's session.
I will post more on this later....
the gold conspiracy guys will keep this up all the way to their graves but suffice it to say, the reasons for owning gold due to inflation concerns are lessening, not growing.
At some point we will have to deal with the debt situation in this nation and then maybe, we will see gold finally move higher as the Dollar moves lower but the Dollar is holding firm right now and thus undercutting any strength in gold.
I am more nervous about the index funds finishing up their buying of gold to balance their portfolios than anything else. That has been driving the Comex futures higher but once it dries up, look out.
Look up Nanex again, it wasn't a fat finger. It has been proven that just one HFT algo sold 338 contracts at a time in 9 turns during 100ms. Game is rigged and EOD daily candle charts are useless in manipulated market.
ReplyDeleteYou either have a long term physical strategy and don't even care about daily price swings (aka investor), or you better play the futures game knowing how the other players smash around the price these days.
None the less I guess TraderDan is slowly evolving, first time he ever acknowledged the existence of HFT and even quoted Nanex!
Just looked at the 5-year charts of MasterCard and Visa and I'm speechless.
ReplyDeleteMA for example was at $111 in January 2009 and now its at $840.
Who would have known that within just a few years after the credit crisis, a lifetime's worth of gains would have been made on credit card stocks, LOL....
Just goes to show you that "Infinite Fiat" is just that. Truly Infinite.
The more that we print, we'll the sky is the limit for prosperity for the average joe who wants to whip out his plastic and buy stuff.
And now we got BitCoin also.
Never before have I seen so many money making opportunities so soon after a credit debacle.
Bernanke and Obama's rescue of the financial markets is simply mind-boggling.
Sadly, Eisenhower's farewell address rings more true today than it did in 1960: "you and I, and our government -- must avoid the impulse to live only for today, plundering for our own ease and convenience the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow."
DeleteWith the 17 trillion debt, its already mortgaged to the hilt. And what the democrats did in the senate last year to rob the minority of their rights, has put a big dent in democracy. That is quite a farewell address.
Deletedoes anybody know how can I ignore people such as Mark , so I don't have to deal with his crap ? in other blogs there is an application by which you can choose to cancel trolls like him , in other words , I just choose who I want to see and who I don't …
ReplyDeletehttp://www.zerohedge.com/news/2014-01-08/proof-golds-latest-slam-was-not-fat-goldfinger. Damon right on
ReplyDeletelook up white wolf Dan is giving us a lesson or two about whats going on … hell Dan , I don't know , you probably are right . Just so you know I am not concerned about who the hell is doing this , but why the CFTC doesn't take it seriously , and look into it .
ReplyDeleteWhat a blog it is. This is giving me very important information so thanks a lot for posting.
ReplyDeleteFood Delivery Script